Printed in Japan

AO

ZO

RA

BA

NK

, LTD

. Interim R

epo

rt 2010

This interim report is printed with soy ink.

Interim Report 2010Six-Month Period Ended September 30, 2010

Profile

Originally established as the Nippon Fudosan Bank, Limited, under the Long-Term Credit Bank Law in April 1957, the Bank changed its name to Aozora Bank, Ltd., in 2001. In April 2006, the Bank transitioned from a long-term credit bank to a full-service commercial bank. Aozora’s shares were listed on the First Section of the Tokyo Stock Exchange in November 2006. Aozora Bank is firmly established in the Japanese financial system, and its fundamental management focuses on the creation of mutually beneficial partnerships, increased corporate value, and best practice in corporate governance, internal control and risk management. We are truly committed to contributing to the economic and social growth of the country through our business operations. Aozora aims to be a unique bank that is neither a mega bank nor a regional financial institution, and provides a range of financial products and services including deposits and debentures, lending, loan syndication, securitization, business revitalization and investment advice to meet the needs of our retail, corporate and financial institution clients.

Established ........................................................................... April 1957Capital stock (consolidated) ................................................... ¥419.8 billionTotal assets (consolidated) ..................................................... ¥4,986.3 billionConsolidated capital adequacy ratio (domestic standard) ........ 15.57%Consolidated Tier 1 ratio (domestic standard) ......................... 16.70%Number of employees (non-consolidated) ............................... 1,497Branch network ..................................................................... 20 domestic offices, 2 overseas representative officesAddress ................................................................................ 3-1, Kudan-minami, 1-chome, Chiyoda-ku, Tokyo 102-8660, Japan

Long-term credit ratings Moody’s ............................................................................. Baa1 Standard & Poor’s .............................................................. BBB+ Fitch Ratings ...................................................................... BBB R&I .................................................................................... BBB+ JCR ................................................................................... BBB+

(As of September 30, 2010)

1 1710Results and

Ongoing StrategyFinancial and

Corporate DataBusiness Operations

1 4 6

18 24

25 25 66

91

11

13 14 15 16

Top MessageFinancial HighlightsTopics

Corporate DataShare Procedure InformationFinancial Data Consolidated Information Non-Consolidated Information Disclosure Based on Basel II Capital Accord Pillar III

Retail and Business Banking GroupCorporate Banking GroupSpecialty Finance GroupFinancial Institutions GroupFinancial Markets Group

Forward-Looking StatementsThis interim report contains forward-looking statements regarding the Bank’s financial condition and results of operations. These forward-looking statements, which include the Bank’s views and assumptions with respect to future events, involve certain risks and uncertainties. Actual results may differ from forecasts due to changes in economic conditions and other factors.

Contents

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Top Message

January 2011

Brian F. PrincePresident and Chief Executive Officer Representative Director

Thank you for your continuing support of Aozora Bank. We appreciate your taking the time to read our Interim Report, which includes the FY2010 interim results. Your management team is working hard building a clear track record of getting the results. Last year, we returned to profitability by reporting net income of ¥8.3 billion. For the first half of FY2010, the Bank recorded net income of ¥14.2 billion, 101% of this year’s original full year forecast. We also revised upwards our full year FY2010 forecast to ¥21.0 billion. In addition to the positive earnings results, we finished the first half with an industry-leading Tier 1 ratio of 16.70% as of September 30, 2010, a 1.48 points increase from 15.22% as of March 31, 2010. The Bank’s funding base is also stronger. Retail funding represented 68.9% of core funding, well in excess of our mid-term target of 50%, and we ended the first half with ¥659.6 billion in liquidity reserves. In addition to a sound financial base, your company has made changes designed to bring about growth in a number of important areas. In August, we announced an organizational realignment designed to better position the Bank for the future. In addition to creating new middle market teams, the changes centralized our management of all real estate-related exposures and reaffirmed our commitment to deepening our focus on the mass affluent retail market. The impact on shareholder value is a primary consideration of management as it makes strategic decisions and manages the day-to-day operations of the Bank. In August 2010, we announced the commencement of share purchasing under the Aozora Bank Executive Share Ownership Plan. We believe that this program will more closely align the economic incentives of management of the Bank with the interests of our shareholders. While global market conditions have largely stabilized, the recovery remains fragile. Much uncertainty remains. Despite global market conditions, we feel confident in our ability to generate a stable, highly predictable level of core earnings. On behalf of the management team of Aozora Bank, I would like to express my gratitude for your ongoing support.

Kunimi TokuokaDeputy President

Shinsuke BabaDeputy President

Brian F. PrincePresident and CEO

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Reporting net income of ¥14.2 billion yen was an important highlight. The level of net

income reported for the first half of FY2010 repre-sented a 119.6% increase versus the first half of FY2009. On an annualized basis, the return on com-mon equity was 5.2%, close to our near-term target of 6.0%. In addition, the second quarter of FY2010 marked the sixth consecutive quarterly profit that we have recorded. Importantly, our results reflected core earnings, with little in the way of one-time gains. Based upon the strong first half results, we revised upward our full year FY2010 net income forecast from ¥14.0 billion to ¥21.0 billion. There are several other elements in our first half financial results worth mentioning. Retail funding increased by 43.9% as compared to September 30, 2008, and now represents over 68.9% of our core funding. Our loan-to-deposit ratio, an important measure of liquidity, was 95.0%, decreasing from 141% as of September 30, 2008. The Bank’s strong liquidity position was supported by ample liquidity reserves of ¥659.6 billion as of September 30, 2010, and the funding base remained very solid. The man-agement team has also been focused on improving the efficiency of the Bank’s operations. General and administrative expenses in the first half of FY2010 decreased 8.9% year on year and were 18.7% lower

than two years ago. Our overhead ratio (general and administrative expenses divided by net revenue) was 48.2% in the first half, a very good result. Another major area of focus this year has been on reducing funding costs. Throughout the first half, funding costs have been lowered by 16 basis points year on year. The lower level of funding costs has enabled us to expand our net interest margin and to sustain our level of net revenue. Focused and disciplined risk management con-tinues to be at the forefront of our priorities. The Bank continues to benefit from our early and aggres-sive actions on reducing higher risk legacy assets. Net credit costs in the first half were ¥6.4 billion yen, decreasing 40.1% year on year. Despite the improved results, we maintain one of the higher loan loss reserves in the industry, a strong protection against future loan losses. As of September 30, 2010, the Bank’s loan loss reserve as a percentage of total loans was 3.7%. Lastly, our capital ratios continue to be among the highest in the industry. Aozora’s Tier I capital ratio was 16.70% as of September 30, 2010. Economic conditions remain uncertain. Nonethe-less, we believe that our strong start gives us posi-tive momentum as we head into the second half of FY2010.

What do you consider to be the highlights in the first half financial results?

What are Aozora’s key areas of focus?

Q1.

A.

Q2.The retail/mass affluent, middle market/SME and real estate markets form our priority

segments. Since March 2008, retail funding has increased 57.3% and our customer base now exceeds 360,000. We established new middle mar-ket specialty teams in August 2010, and these teams are taking advantage of the Bank’s expertise to meet the needs of SMEs. Real estate is a core competency for Aozora, and we are recognized as a top player in the market, with the ability to conduct this business safely and profitably. In addition to the above, the Bank enjoys long-standing positions and market recognition in a wide range of business segments. For example, we are very proud of our track record serving the needs of

Japan’s regional financial institutions and have rela-tionships with over 90% of the regional banks. The variety of business lines also means that Aozora is not overly dependent on any one area in terms of asset exposure or revenue production. In addition to individual businesses, the Bank focuses on corporate priorities such as expense control, funding cost reductions, risk management, products and knowledge building, which are intended to improve our financial performance and strengthen our franchise. By promoting our core businesses and corporate priorities together, we believe the Bank is able to meet or exceed its key financial targets without reaching too much for growth or taking on any unwarranted risks.

A.

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Can you describe the progress you have made in addressing key issues?

Q3.We have made significant progress in reshaping Aozora Bank into an institution

with a lower risk profile and a sustainable level of

core profitability over the past two years. The following is a summary scorecard we have used to judge our progress:

A. Past issues What we have achieved

√ Funding Stability and Liquidity

n Retail funding now 68.9% of core fundingn 95% loan-to-deposit ratio as of September 30, 2010; liquidity reserves of

¥659.6 billion

√ Reduction in Risk Assets

n Legacy and non-core assets reduced by 87% since September 2008n Credit costs stabilized; 1H credit costs of ¥6.4 billion

√ Cost Controlsn G&A expenses reduced 8.9% year on yearn Efficiency ratio (OHR) reduced; 1H at 48.2%

√ Sustainable Profitability

n 1H net income of ¥14.2 billion, 101% of original full year forecastn Further earnings growth through funding cost and expense reductions

achievable

√ Focus on Domestic Businesses

n Significant expansion of retail customer base; promotion of cross-selling activities

n Creation of middle market business group

√ Strong Capitaln Tier 1 ratio of 16.70% as of September 30, 2010n Willing to pursue prudent deployments of capital for strategic opportunities

As you can see, we have made significant progress in all our key areas of focus. That being said, we will continue to make every effort to increase our corporate value rather than just being satisfied with the status quo.

Brian F. PrincePresident and Chief Executive OfficerRepresentative Director

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Financial Highlights

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Business profit: ¥21.8 billion, an increase of 10.2% year on year. Net income: ¥14.2 billion, an increase of 119.6% year on year. Progress of 70.3% and 101.3%, respectively, towards the initial FY2010 full-year forecasts.

Net revenue increased ¥4.7 billion in real terms year on year to ¥42.1 billion

when adjusted for a one-time gain of approximately ¥4.6 billion on CDS hedging transactions in 1H 2009.

The net interest margin expanded 13 bps year on year, mainly as a result of a reduction in funding costs.

General and administrative expenses decreased by ¥2.0 billion or 8.9% to ¥20.3 billion, reflecting strict cost

controls. The OHR was 48.2%.

Credit-related expenses decreased by ¥4.3 billion to ¥6.4 billion.

The ratio of the allowance for loan losses to loans outstanding was 3.7%, remaining one of the highest among major Japanese banks.

Financial Reconstruction Law (FRL) claims decreased by ¥29.9 billion year on year to ¥141.9 billion and FRL

credit to total credit decreased 60 bps to 4.92%. The coverage ratio for FRL claims remained high at 83.3%

(non-consolidated basis).

Percentage of retail funding to total core funding increased to 68.9% (compared to 63.1% as of end-March 2010).

The Bank maintained a strong liquidity reserve of ¥659.6 billion as of end-September 2010.

Capital adequacy ratio was 15.57%, and the Tier 1 ratio was 16.70%.

Remaining among the highest in the Japanese banking industry.

{ ( ) ( ) }

ConsolidatedFor the six-month periods ended September 30, 2010, 2009 and 2008, and the years ended March 31, 2010 and 2009 (Millions of Yen)

Sep. 30, 2010 Sep. 30, 2009 Sep. 30, 2008 Mar. 31, 2010 Mar. 31, 2009

Ordinary income 69,756 77,928 116,777 146,058 182,566Ordinary profit (loss) 15,381 7,667 (35,577) 6,482 (232,053)Net income (loss) 14,177 6,456 (28,041) 8,303 (242,553)Capital stock 419,781 419,781 419,781 419,781 419,781Total equity 555,129 539,919 728,237 538,713 529,607Total assets 4,986,277 5,529,239 6,803,490 5,157,322 6,077,330Debentures 340,378 918,707 2,025,297 562,122 1,489,693Deposits (Note 1) 2,979,886 3,014,352 3,017,800 3,087,573 2,909,834Loans and bills discounted 2,831,814 3,334,086 4,260,429 3,070,235 3,484,945Securities 1,312,834 1,299,454 1,474,445 1,276,311 1,126,595Total equity per share (yen) 251.01 240.86 332.21 238.60 232.51Basic net income (loss) per share (yen) 9.48 4.32 (16.99) 4.10 (150.92)Consolidated capital adequacy ratio (domestic standard) 15.57% 13.13% 13.68% 14.03% 11.60%Tier 1 ratio (domestic standard) 16.70% 14.24% 14.75% 15.22% 12.57%Return on equity (ROE) (Note 2) 7.71% 3.63% (9.83%) 1.73% (52.20%)

Notes: 1. Deposits include negotiable certificates of deposit (NCDs). 2. ROE is calculated as follows:

ROE = (Net income – Dividends paid on preferred stock)*

x 100 Total equity – Number of preferred shares x Issue + Total equity – Number of preferred shares x Issue ÷ 2 at beginning of period outstanding at beginning of period price at end of period outstanding at end of period price

* For the six-month period ended September 30, the numerator is annualized.

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* Yen amounts stated in millions of yen have been truncated. Amounts expressed in billions of yen have been truncated to one decimal place.

Ordinary income

120

90

60

30

0

(Billions of Yen)

69.877.9

116.8

2008/9 2009/9 2010/9-300

0

300

600

90090

60

30

0

–30 –28

6.5

42.1

14.2

42.1

Net revenue breakdown/Net income

Net revenue　　　Net income

(Billions of Yen)

2008/9 2009/9 2010/9

36.4

Total assets and total equity

8,000

6,000

4,000

2,000

0

800

600

400

200

0

Total assets Total equity

(Billions of Yen) (Billions of Yen)

4,986.3555.1

5,157.3 538.76,077.3

529.6

2008/3 2009/3 2010/9

Normal credit A 2,741.4 Disclosed claims under the Financial Reconstruction Law B 141.9 (Non-consolidated reserve and coverage ratio) B/(A+B) 4.92% Collateral and guarantee C 80.6 Allowance for loan losses D 37.5 Coverage ratio (C+D)/B 83.3%

(Billions of Yen)

Non-consolidated disclosed claims under the Financial Reconstruction Law

As of September 30, 2010

A

B

0

10000

20000

30000

40000

0

10000

20000

30000

400004,000

3,000

2,000

1,000

0

(Billions of Yen)

2,979.9

2008/3 2009/3 2010/9

2,831.83,087.6 3,070.2

2,909.8

3,484.9

Deposits　　　 Loans and bills discounted

Deposits and loans and bills discounted(Deposits include negotiable certificates of deposit (NCDs))

(Deposits include negotiable certificates of deposit (NCDs))

0

3000

6000

9000

12000

0

5

10

15

2020

15

10

5

0

11.60%12.57%

16.70%

14.03%

15.22%

505.8487.9

Regulatory capital Tier 1 capitalCapital adequacy ratio Tier 1 ratio(domestic standard) (domestic standard)

2008/3 2009/3 2010/9

Capital adequacy ratio (domestic standard)

1,200

900

600

300

0

(Billions of Yen) (%)

483.9 524.7 529.4 542.6

15.57%

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(1) Basic PolicyAozora Bank is aware of its responsibility to society, and we are expanding our CSR activities, aiming for observance of legal obligations, environmental consciousness, our contribution to Japan’s regions and communities, and continuous social develop-ment. As well as actively promoting activities to contribute to society as a responsible corporate citizen, we also support our employees in their contributions to society. Some of the Bank’s main CSR activities are outlined below.

(2) Activities1. Environmental Conservation Activitiesn Challenge 25 CampaignThe Bank participates in the Challenge 25 Cam-paign, a Japanese Ministry of the Environment campaign to reduce global warming. Aozora conducts ongoing activities to contribute to environmental conservation.

n Efforts Made Toward Compliance with Laws and Regulations for Energy Saving

In January 2010, the Bank’s Fuchu Computer Center was selected as a “target office for global warming countermeasures” based on the revised Tokyo Metropolitan Environmental Security Ordi-nance, and the Bank is required to reduce the emission of greenhouse gases at this office. The Bank was also specified as a “specific business entity” based on the Energy Conservation Act in October 2010, and is required to reduce its use of energy accordingly. Aozora is doing its utmost to achieve its targets for energy saving.

n Participation in CO2 Reduction/Lights Down Campaign

Every June and July, the Bank turns off the lights and neon signs at its office building for several hours as part of the Ministry of the Environment’s coun-trywide CO2 Reduction/Lights Down Campaign.

n Recycling of Waste PaperAs part of our recycling efforts, documents that have reached the end of their storage period

are processed and recycled, rather than being disposed of by incineration.

n Recycling of Data MediaData media, such as CDs and data storage disks, which are no longer required, are used in ther-mal recycling (as a heat source). We also recycle the post-incineration ashes as a constituent of cement.

n Participation in Cool Biz, Warm Biz InitiativesThe Bank has chosen to participate in the Ministry of the Environment’s Cool Biz and Warm Biz initia-tives in order to reduce the amount of energy con-sumed by air conditioners and heaters. As such, employees dress business casual throughout the year to be more comfortable in the workplace.

2. Social Contributionn Support for Special Olympics NipponThe Bank is one of the corporate sponsors of Spe-cial Olympics Nippon (SON), a non- governmental organization, which empowers people with intel-lectual disabilities to participate in their commu-nities, develop belief in themselves and improve their quality of life by offering continuous sports training and holding games to show their abilities. The Bank has placed Yell Fundraising pamphlets for individual donations at its branches since May 2010 to support SON PR activities. The Bank also participates in events held by SON, and cooperates in the making of misanga (good luck bracelets), which are presented as a sign of support to each of the athletes who partici-pate in the national tournament. We also partici-pated as a presenter at the awards ceremony for the tournament.

Corporate Social Responsibility

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A photo exhibition was held at the Bank’s Umeda Branch in July 2010 to introduce the activities of SON to our customers. In addition, we held an event in Nihonbashi, Tokyo, in November 2010, in which Kayoko Hosokawa, who introduced Special Olympics to Japan and established the Japanese NPO Special Olympics Japan, was invited to deliver a lecture to employees of many supporting businesses including Aozora Bank.

n United Nations and Japanese Habitat Associations

Aozora Bank provides support for the interna-tional community development work of the United Nations and Japanese Habitat Associations, including the collection of donations. In October 2010, the Bank carried out volunteer activities to sort foreign coins collected at airports, which will be used as aid for the flooding in Pakistan.

n Volunteer OrganizationUsed stamps are collected within the Bank in order to provide support in the form of capital and medical supplies for volunteer groups engaged in providing medical care overseas.

n Finance for Regional Medical InstitutionsIn cooperation with regional financial institution clients, Aozora Bank supports the finance side of hospital operations, which are crucial to regional health, by conducting situational analyses of medical institutions, assisting in the creation of business plans, and acting as a funding arranger.

n Installation of Automated External Defibrillators (AEDs)

We have installed AEDs at our head office and Fuchu office.

n Support for the Miyazaki Prefecture Foot and Mouth Disease Recovery Effort

The Bank donated to Miyazaki Prefecture to sup-port farmers whose livelihoods were damaged by the outbreak of foot and mouth disease.

n Holding Blue Sky ConcertsAs part of the Bank’s support for culture and the arts, we held our first Blue Sky Concert at the Suntory Hall in Akasaka, Tokyo, in September 2010. Approximately 400 of the Bank’s Tokyo customers were invited to attend a performance of the Japan Philharmonic Orchestra’s string quartet.

3. Close Regional Relationshipsn Kanazawa Art ProjectThe Kanazawa Branch provides use of a show window for the Kanazawa Art Project, which is held periodically on the city’s Hyakuman-goku Street.

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n Participation in the Local Chiyoda-ku Clean-Up Event

Aozora, together with other businesses in the Chiyoda Ward, takes part in clean-up days in the area around head office, in an effort to increase awareness of environmental beautification in the ward.

4. Support for the Elderly and Disabledn Introduction of Communication Boards and

Erasable Writing Boards with Pen Sets at all Aozora Branches

The Bank introduced Universal Design Communication Boards and erasable writing boards with pen sets to assist the smooth pro-cessing of customers with hearing difficulties upon their visits to branches.

5. Human Rights Awarenessn Aozora is committed to creating a corporate

culture in which the diversity and talents of all of our employees are respected. The Bank’s Human Rights Enlightenment Committee was established to promote human rights through the provision of training programs and activi-ties, such as encouraging employees to create human rights slogans. These slogans are regu-lar prizewinners in the Human Rights Slogan Competition sponsored by external institutions.

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Aozora Bank submitted a revised Business Revitalization Plan (BRP) to Japan’s Financial Services Agency (FSA) on December 10, 2010. Aozora intends to grow its domestic-lending focused business model by using management resources efficiently, and by enhancing its risk management capabilities while focusing on the Bank’s areas of strength. Aozora is committed to securing sufficient resources for the repayment of public funds by pursuing efficient operations and increasing profitability. Aozora is fully committed to achieving the BRP.

Business Revitalization Plan

Non-Consolidated(100 Million Yen)

FY2009 FY2010 FY2011 FY2012 FY2013Sep. 30, 2010

Actual Actual Plan Plan Plan Plan

Net revenue 741 397 735 800 905 990General and administrative expenses 406 188 420 440 445 470

Business profit (Note 1) 335 209 315 360 460 520

Credit-related expenses (Note 2) 238 48 120 125 125 125

Gains/losses on sales of stocks and other securities (1) (0) 0 0 0 0

Operating profits 50 157 185 210 310 370

Net income 76 147 200 210 310 370

OHR (Note 3) 54.8% 47.4% 57.2% 55.0% 49.2% 47.5%

Notes: 1. Business profit before general allowance for loan losses 2. General allowance for loan losses + written off/loss on disposal of loans 3. OHR = General and administrative expenses/Net revenue

10

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Business Operations

Corporate Banking Group

Specialty Finance Group

Financial Institutions Group

Financial Markets Group

Retail and Business Banking Group

Major Businesses

Retail Business:o Provision of Financial

Productso Asset Management

ConsultingMiddle Market Business:o Solutions for SME

Customers

Major Businesses

o Loanso Acquisition and

Project Financeo Syndicated Loanso Derivative Productso Private Placement

Bonds, Trustee Services, M&A

Major Businesses

o Real Estate Financeo Special Situations

Businesso Asset Finance

Major Businesses

o Provision of Financial Products

o Solutions to Management Issues

o Collaborative Proposals

Major Businesses

o Derivatives Businesso Development &

Supply of Financial Products

o ALM Business

The Retail and Business Banking Group provides a wide range of financial products and detailed asset management consultation to its retail customers, and is active in the provision of loans for funding and other financial solutions for the Bank’s SME customers.

The Corporate Banking Group provides loans, deriva-tives and deposits, as well as acquisition and project financing, syndicated loan origination and other financial products to large and medium-sized corpo-rations and the public sector in the Tokyo metropoli-tan and Kansai areas. We are committed to the swift provision of a diverse range of financial solutions.

Aozora Bank actively promotes specialty finance, which is made up of a range of areas, including our real estate finance and special situations businesses. Aozora’s strengths come from its industry-leading skills and experience, deal sourcing capability, an advanced credit examination process and its risk management systems.

Aozora’s Financial Institutions Group actively provides a wide array of proprietary financial products while supporting its financial institution clients in solving increasingly complex and diverse management issues, based on its close relationships developed over many years.

The Financial Markets Group develops a variety of derivative products for the diverse risk and asset management needs of our customers. We also man-age interest rate and liquidity risk on the Bank’s overall assets and liabilities. Our ongoing commit-ment is to strengthen our stable revenue streams through synergy in all areas of our operations.

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1. Policy and Areas of FocusBased on our ‘Customer First’ philosophy, Aozora responds to the diverse asset management needs of our retail customers. We provide specialist consulting services through each of our retail channels, whether it be through our staffed branches, our Internet Branch, or our call center. Together with a broad range of financial products, focusing on time deposits, our aim is to provide peace of mind for our customers as they discuss their mid- to long-term asset management needs with us.

2. Results<Detailed Asset Management Consultation>We aim to build relationships of trust with our customers through asset management consultation, and do our utmost to create a relaxed atmosphere for our customers to discuss their needs until 5pm on business days. This also applies in the call center, where the Bank’s profes-sional operators respond politely to our customers’ needs and inquiries to ensure even a first-time call center user can feel at ease.

<Financial Products and Services>We offer a wide range of financial products to meet our customers’ various asset management needs. The Bank’s product lineup begins with a range of deposit products, and also includes investment products such as investment trusts, individual annuity insurance and structured bonds as an intermediary. Aozora offers advi-sory services on life and medical products based on business ties with insurance companies, and specialist teams in some branches provide consultation services on individual loans for asset management, such as real estate assets.

<Enhanced Service Channels>Aozora’s service channels include 18 branches nation-wide, the Internet Branch, our call center and Japan Post Bank partnership ATMs, enabling our customers to easily access the Bank’s products and services. Customers can use approximately 26,000 Japan Post Bank and Post Office ATMs for ordinary account deposits and withdrawals free of charge, even on weekends, and enjoy even more convenient transactions with us by using our telephone and Internet banking services. The Bank will continue to enhance service channels, such as the expansion of the handling of Aozora Bank deposits to all branches of Tsukuba Bank in December 2010.

[Retail Business]

The activities of the Retail and Business Banking Group focus on the taking of deposits from retail customers

and the provision of detailed consultation to meet their asset management needs, and the provision of loans

and other credit to middle market SME customers.

Retail and Business Banking Group

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1. Policy and Areas of Focus<Provision of Solutions for SME Customers>As part of the Bank’s organizational realignment in August 2010, sales promotion for SME customers was unified with that of the Retail Business Group to more appropri-ately respond to the characteristics of SME credit and the needs of our customers. We have established a divi-sion to promote the expansion of lending in the Tokyo metropolitan area introduced by regional financial institu-tions that has already commenced in some branches. The Bank promotes collaborative business with regional financial institutions and provides joint financing support to businesses that they introduce, such as those which contribute to the stimulation of regional economies and companies that wish to expand their banking relation-ships. As well as providing finance, we collaborate on the provision of advice on capital policy and business revital-ization, support for overseas expansion, and proposals for various financing instruments. The Bank also pro-motes contribution to regional economies through the joint support of businesses that support the regions.

2. Results<Initiatives to Facilitate Financing for SMEs>In response to the enforcement of the Act Concerning Temporary Measures to Facilitate Financing for SMEs, etc., in December 2009, the Bank promotes transactions related to the Act and provides support for divisions and branches in responding to customer inquiries regarding the rescheduling of loan repayments. The Bank works together with customers to develop measures for better business management and practical support related to customers’ business operations. Aozora Bank recognizes that the smooth provision of funds to SMEs and housing loan customers is one of its most important responsibilities as a financial institution. The Bank established a Facilitation of Financing Management Policy on February 1, 2010, which set out a framework for appropriate responses to customer requests, including such matters as the amendment of loan terms and conditions. In line with this policy, the Bank is dedicated to courte-ously responding to requests from our customers and in consultations.

[Middle Market Business]

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1. Policy and Areas of FocusThe Corporate Banking Group is responsible for large and medium-sized corporations and the public sector in the Tokyo metropolitan and Kansai areas. In addition to the regular loan business, the Group provides financial instru-ments for LBO finance, M&A, cross-border finance, origi-nation of syndicated loans and the creation of securitized products. Combining strong customer relationships with the Bank’s diverse, superior expertise, the Corporate Banking Group pursues earnings through the provision of high value-added financial solutions to best respond to customer needs, as well as working to expand the customer base and enhance relationships with existing customers.

2. Results<Loans>Funding demand at domestic companies is expected to remain low, and competition among financial institutions for companies with funding needs is expected to further intensify. In this environment, the Bank promotes a diverse range of transactions, such as funding schemes designed for the individual needs of customers, providing a variety of financial solutions and accurate information.

<Acquisition and Project Finance>Aozora provides LBO finance that is used in manage-ment buyouts (MBO) and mergers and acquisitions (M&A). The Bank is also expanding its activities in project finance and finance backed by operational assets, such as medical institutions and hotels, utilizing our expertise in operational cash flow analysis.

<Syndicated Loans>Syndicated loans allow our corporate customers to rein-force their funding base, as well as enhance their public image as financially astute institutions. Aozora Bank

places a great deal of emphasis on its syndicated loan business, and in addition to meeting the needs of a broad range of corporate customers, ranging from SMEs and middle market companies to large corporations, the Bank has acted as the arranger in project finance transactions.

<Derivative Products>The Bank offers a wide range of sophisticated derivative products along with our integrated line of services, from structuring and market making to distribution. Our head office specialists consult extensively with corporate cus-tomers in order to provide the best possible solutions. We have enhanced training of sales staff to ensure that they are able to clearly explain the structure and risk associated with each product.

<Securitization>Aozora Bank responds to customers’ needs to diversify funding using their assets, even securitizing various types of claims that have been considered difficult to securitize in the past.

<Other Services (Private Placement Bonds, Trustee Services, M&A)>Aozora Bank provides products tailored to the private placement bond issuance needs of our customers such as non-collateral and guaranteed private placement bonds. We also act as fiscal agent or trustee for private placement and public bonds. Concentration on core competencies in corporate operations is expected to become increasingly significant with the dramatic changes that have occurred in the economic environ-ment. The Bank develops an understanding of its cus-tomers’ business revitalization needs through its daily operations and supports revitalization by seamlessly cooperating with M&A specialists.

Summary of Major Businesses

Corporate Banking Group

14

Business O

peratio

nsS

pecialty Finance G

roup

1. Policy and Areas of FocusAozora Bank actively promotes its specialty finance busi-ness as the centerpiece of our business model. It is made up of a wide range of areas including real estate finance and special situations businesses. Aozora’s strengths come from its industry-leading skills and experience, deal sourcing capability, an advanced credit examination process and its risk management systems. We approach our business with a strong understanding of the situational and environmental changes in all of our business mar-kets, such as the real estate and non-performing claims markets.

2. Results<Real Estate Finance>There was increased refinancing activity in the real estate securitization market in FY2010 due to an easing of conditions in the financing environment. As a leader in real estate non-recourse finance, Aozora Bank continues to provide high value-added financial services. Our team of bankers have a wealth of experience and expertise in real estate, finance, and securitization, and serve the diverse needs of the Bank’s customers while responding to the changing environment. Also, in the organizational realignment in August 2010, all real estate-related asset portfolios including loans to real estate companies booked at headquarters were centralized within the Specialty Finance Group. The pur-pose of the change was to ensure greater consistency in deal valuation and underwriting methodology, proactively share monitoring practices and industry knowledge, and enhance our ability to provide solutions and originate new transactions.

<Special Situations>The revitalization of businesses and corporations is a field in which Aozora excels. We make investments in loans to ailing companies and to corporations facing the chal-lenges of a rapidly changing operating environment, and provide recovery finance to companies under rehabilita-tion. AOZORA Loan Services Co., Ltd., our loan servicer subsidiary aimed at corporate rehabilitation, provides support to financial institutions disposing of problem loans and also provides corporate advisory services, such as developing business recovery plan proposals.

<Asset Finance>We provide finance for the construction of new ocean-going vessels such as cargo ships and tankers that play a major role in international logistics, as well as finance for the purchase of used ships and for refinancing. With a long history of ship finance and international networks of foreign financial institutions/operators, we provide financing utilizing the long-term relationships with clients and our expertise in the field.

Summary of Major Businesses

Specialty Finance Group

15

Business O

peratio

nsFinancial Institutio

ns Gro

up

1. Policy and Areas of FocusThe Bank actively provides a wide array of products and services through our nationwide distribution network covering regional financial institutions from across Japan. The current operating environment is difficult, and our financial institution clients are experiencing increasingly sophisticated and diverse management challenges. Aozora aims to be the bank of choice for regional financial institutions, and we are committed to supporting our financial institution clients in this environment through solutions designed to diversify investment instruments and enhance revenue streams, improve loan portfolios, boost sales forces, strengthen capital, and support human resources. We also aim to develop ongoing win-win relationships as a strategic business solution partner to our clients.

2. Results<Business Alliances with Regional Financial Institutions>In our aim to be the bank of choice for regional financial institutions, we have worked to build strategic partner-ships with regional financial institutions to bring about synergy and increase enterprise value.

n Deposit Agency BusinessIn May 2010, Tsukuba Bank commenced the handling of applications for Aozora Bank derivative-embedded time deposits. This deposit agency business represents a new business line that forms the core of the strategic partner-ship concluded between the two banks in August 2009, and is the first example of a deposit agency business arrangement in which a regional bank handles a nation-wide bank’s structured deposits in Japan. The deposit agency business was expanded to all branches of Tsukuba Bank in December 2010.

n Business Recovery FundIn May 2010, the Bank established the Utsukushima Mirai Fund with the Organization for Small & Medium Enterprises and Regional Innovation, JAPAN, the Credit Guarantee Corporation of Fukushima and 10 financial institutions (The Toho Bank, Ltd., The Fukushima Bank, Ltd., The Daito Bank, Ltd., Fukushima Shinkin Bank, Shirakawa Shinkin Bank, Sukagawa Shinkin Bank, Himawari Shinkin Bank, Fukushimakenshoko Shinkumi Bank, Iwaki Shinkumi Bank, and Soso Shinkumi Bank) in Fukushima Prefecture. This fund is the first public–private fund established in the Tohoku region for the recovery of SME businesses. The establishment of this fund is an example of Aozora’s efforts to develop mutually beneficial relationships with regional financial institutions, as well as contribute to the recovery of SME businesses and the invigoration of local economies through its expertise in the support of SMEs and recovery business.

Summary of Major Businesses

Financial Institutions Group

16

Business O

peratio

nsFinancial M

arkets Gro

up

1. Policy and Areas of FocusThe Financial Markets Group works toward increasing profitability and expanding the customer base in our derivative business by enhancing the value-added sales function, implementing a consulting-style approach and supplying high value-added new products. We also aim to continue improving our capabilities in Product Development & Supply by offering a variety of financial products to meet the needs of all customer segments including corporate customers, financial institutions and retail customers. In ALM, we maintain a stable portfolio of well-diversified investments in highly liquid securities and pursue consistent profitability through well-balanced interest rate risk operations, supplementing the profits from our core businesses.

2. Results<Derivatives>Strong momentum in the volume of outstanding deriva-tive-embedded deposits for both retail customers and financial institutions brought us robust results. The Bank was able to respond to its corporate customers’ deriva-tive needs arising from market movements such as hedging for yen appreciation and fixing interest rates by proposing currency options, ALM swaps and other risk management tools for foreign currency cash flow man-agement. As well as robust profitability, these efforts have led to the expansion of a new customer base.

<Product Development & Supply>The Bank commenced new product offerings to its mass affluent customers with the handling of FX-linked time deposits as well as sales of Structured Notes for retail customers via subsidiary Aozora Securities Ltd. We also continue the development of new products to respond to the various risk hedging needs of our corporate customers.

<ALM>The Bank has worked hard to build a stable funding base focused on retail customers and on the reduction of funding costs. We have also promoted diversified invest-ments focused on highly liquid securities and the efficient management of surplus funds. Consistent profitability has been secured through well-balanced interest rate risk operations, supplementing profits from our core businesses.

Summary of Major Businesses

Financial Markets Group

Financial and C

orp

orate D

ata

17

Financial and

Co

rpo

rate Data

Financial and Corporate Data

Corporate Data Corporate History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Business Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Organization Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Directors, Auditors and Executive Officers . . . . . . . . . . . . . 21 Staff Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Office Directory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Business Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Share Procedure Information . . . . . . . . . . . . . . . . . . . 24

Financial DataConsolidated InformationCONSOliDAtED BuSiNESS RESultS . . . . . . . . . . . . . . . . . 25 Consolidated Financial Highlights . . . . . . . . . . . . . . . . . . . . 25CONSOliDAtED FiNANCiAl REviEw . . . . . . . . . . . . . . . . . . 26 Consolidated and Equity-Method Companies . . . . . . . . . . . 26 Analysis of Business Results . . . . . . . . . . . . . . . . . . . . . . . . 26 Analysis of Financial Condition . . . . . . . . . . . . . . . . . . . . . . 28 Consolidated Capital Adequacy Ratio (Domestic Standard) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Disclosure of Exposure to Securitized Products . . . . . . . . . 31CONSOliDAtED SEMiANNuAl FiNANCiAl StAtEMENtS . . 33 Consolidated Balance Sheets (unaudited) . . . . . . . . . . . . . 33 Consolidated Statements of income (unaudited) . . . . . . . . . 34 Consolidated Statements of Changes in Equity (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Consolidated Statements of Cash Flows (unaudited) . . . . . 36 Notes to Consolidated Semiannual Financial Statements (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37iNCOME ANAlySiS (Consolidated) . . . . . . . . . . . . . . . . . . . . . 65 interest-Earning Assets and interest-Bearing liabilities . . . . 65 Fees and Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 trading Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Other Ordinary income (Net) . . . . . . . . . . . . . . . . . . . . . . . 65

Non-Consolidated InformationNON-CONSOliDAtED BuSiNESS RESultS . . . . . . . . . . . . . 66 Non-Consolidated Financial Highlights . . . . . . . . . . . . . . . . 66NON-CONSOliDAtED CAPitAl ADEQuACy RAtiO (Domestic Standard) . . . . . . . . . . . . . . . . . . . . . . . . 67NON-CONSOliDAtED SEMiANNuAl FiNANCiAl StAtEMENtS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Non-Consolidated Balance Sheets (unaudited) . . . . . . . . . 68 Non-Consolidated Statements of income (unaudited) . . . . . . 69 Non-Consolidated Statements of Changes in Equity (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70iNCOME ANAlySiS (Non-Consolidated) . . . . . . . . . . . . . . . . . 71 Net Revenue, Business Profit . . . . . . . . . . . . . . . . . . . . . . . 71 Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 yield on interest-Earning Assets, interest Rate on interest-Bearing liabilities, Net yield/interest Rate . . . . . . . 71 Average Balance of interest-Earning Assets and interest-Bearing liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 72 Analysis of interest income and interest Expenses . . . . . . . 73 Fees and Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 trading Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Other Ordinary income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 General and Administrative Expenses . . . . . . . . . . . . . . . . . 75

DEPOSit OPERAtiONS (Non-Consolidated) . . . . . . . . . . . . . 76 Balance by Deposit Account . . . . . . . . . . . . . . . . . . . . . . . . 76 Balance of time Deposits by Residual Period . . . . . . . . . . . 76 Outstanding Balance by Depositor . . . . . . . . . . . . . . . . . . . 77 Deposits per Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Deposits per Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77DEBENtuRE OPERAtiONS (Non-Consolidated) . . . . . . . . . . 78 Outstanding and Average Balance of Debentures . . . . . . . . 78 Balance by Residual Period . . . . . . . . . . . . . . . . . . . . . . . . 78 Outstanding Balance of Debentures per Office . . . . . . . . . . 78 Outstanding Balance of Debentures per Employee . . . . . . . 78lOAN OPERAtiONS (Non-Consolidated) . . . . . . . . . . . . . . . . 79 Outstanding Balance of loans . . . . . . . . . . . . . . . . . . . . . . 79 Balance by Residual Period . . . . . . . . . . . . . . . . . . . . . . . . 79 Ratio of loans and Bills Discounted to Debentures/Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 loans per Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 loans per Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 loans to Small and Medium-Sized Corporations . . . . . . . . 80 Consumer loans Outstanding . . . . . . . . . . . . . . . . . . . . . . 80 Credits to Major Shareholder Groups . . . . . . . . . . . . . . . . . 80 Breakdown of loans and Bills Discounted by industry . . . . 80 Risk-Monitored loans by industry . . . . . . . . . . . . . . . . . . . . 81 Balance of loans and Bills Discounted, Classified by Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Breakdown of Balance of Acceptances and Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Breakdown of loans and Bills Discounted by Collateral . . . 81 Breakdown of Collateral for Customers’ liabilities for Acceptances and Guarantees . . . . . . . . . . . . . . . . . . . 82 write-Off of loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 Allowance for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . 82 Country Risk Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 Disclosed Claims under the Financial Reconstruction law . . . 83 Risk-Monitored loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 Reserve Provision Ratios for Each Category of Borrower, Based on Asset-Assessments . . . . . . . . . . . . . . . . . . . . . 83 Asset-Assessment, Disclosed Claims, write-Offs, Reserves and Risk-Monitored loans . . . . . . . . . . . . . . . . . 84SECuRitiES (Non-Consolidated) . . . . . . . . . . . . . . . . . . . . . . 85 Outstanding and Average Balance of Securities Held . . . . . 85 Balance of Securities by Residual Period . . . . . . . . . . . 85–86 Ratio of Securities to Debentures and Deposits . . . . . . . . . 86SECuRitiES BuSiNESS (Non-Consolidated) . . . . . . . . . . . . . 86 underwriting of Public Bonds . . . . . . . . . . . . . . . . . . . . . . . 86 Over-the-Counter Sales of Public Bonds and Securities investment trusts . . . . . . . . . . . . . . . . . . . . . . . 86 Average Balance of Securities (trading Account) . . . . . . . . . 86iNtERNAtiONAl OPERAtiONS (Non-Consolidated) . . . . . . . 87 Foreign Exchange transactions . . . . . . . . . . . . . . . . . . . . . 87 Balance of Assets in international Operations . . . . . . . . . . . 87OtHER OPERAtiONS (Non-Consolidated) . . . . . . . . . . . . . . . 88 Principal Fees and Commissions . . . . . . . . . . . . . . . . . . . . 88 Domestic Exchange transactions . . . . . . . . . . . . . . . . . . . . 88 Automated installations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88CAPitAlizAtiON (Non-Consolidated) . . . . . . . . . . . . . . . . . . . 89 History of Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 Major Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 Ownership and Distribution of Shares . . . . . . . . . . . . . . . . . 90

Disclosure Based on Basel II Capital Accord Pillar III—Market Discipline . . . . . . . . . . . . . 91

Co

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18

Financial and

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Corporate Data

Corporate History

April 1957 Established as the Nippon Fudosan Bank, limited (capital: ¥1 billion) in accordance with the

long-term Credit Bank law

November Started issuance of debentures

September 1958 Started issuance of discount debentures

July 1964 Started foreign exchange business as an authorized foreign exchange bank

September listed stock on the tokyo Stock Exchange

February 1970 listed stock on the Osaka Securities Exchange

October 1977 Changed name to the Nippon Credit Bank, ltd .

May 1991 Established NCB Private Equity Co ., ltd . (currently Aozora investment Co ., ltd .)

February 1994 Established the Nippon Credit trust Bank, ltd . (currently Aozora trust Bank, ltd .), the first

domestic subsidiary classified as other type of business

December 1998 Started special public management in accordance with the Financial Reconstruction law and

terminated listing of stock on the tokyo Stock Exchange and the Osaka Securities Exchange

September 1999 Commencement of NCB Servicer Co ., ltd . (currently AOzORA loan Services Co ., ltd .), servicer

operations

September 2000 Share Purchase Agreement regarding the transfer of the Bank’s shares was signed between Deposit

insurance Corporation and SOFtBANK CORP ., ORiX Corporation, the tokio Marine and Fire

insurance Co ., ltd . (currently tokio Marine & Nichido Fire insurance Co ., ltd .), and other financial

institutions

Ended special public management

November Commenced telephone banking services

January 2001 Changed name to Aozora Bank, ltd .

April launched Aozora Direct time Deposit as a product exclusively available through telephone

banking

October 2002 Commenced over-the-counter sales of personal pension life insurance policies

March 2003 Moved headquarters

September through a common stock tender offer conducted in accordance with the Securities Exchange

law (currently the Financial instruments and Exchange Act), all common stock of the Bank held by

SOFtBANK CORP . was transferred to the ownership of Cerberus NCB Acquisition, l .P ., General

Partner Cerberus Aozora GP l .l .C .

October 2004 launched Aozora Pocket time Deposit (permits partial withdrawals before maturity)

June 2005 launched Excellent First time deposit (callable time deposit)

April 2006 Converted from ‘long-term Credit Bank’ to an ‘Ordinary Bank’

issued a Straight Bond

Established a securities subsidiary, Aozora Securities Co ., ltd .

November listed on the First Section of the tokyo Stock Exchange

Established tokyo Nihonbashi Branch

May 2007 Established Shanghai Representative Office

April 2008 tender offer for common shares by Cerberus NCB Acquisition, l .P .

April 2009 Established internet Branch

Commenced internet banking services

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19

Financial and

Co

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rate Data

● Deposits

Deposits

Checking accounts, savings accounts, call deposits, time deposits, specified deposits, tax-savings deposits,

non-residents yen and foreign currency deposits

Negotiable certificates of deposit

● Debentures

issuance of debentures and discounted debentures

● Lending

Loans

loans on deeds, loans on notes and overdraft

Discount on promissory notes

Bankers’ acceptances and discounts on commercial bills and documentary drafts

● Securities investment Government bonds, municipal bonds, corporate bonds, equities and other securities held as a reserve for customer withdrawals

or asset management purposes

● Domestic exchange

Such services as money orders, electronic remittance and collection of payments, etc .

● Foreign exchange

Remittance to foreign countries and other foreign currency-related businesses

● Consignment of bonds and registration Consignment business for soliciting or managing public bonds, registration of public bonds as a registered institution, and issue

and payment agent business

● Other services 1 . Guarantee of liabilities (acceptances and guarantees)

2 . lending of securities

3 . underwriting of public bonds

4 . Over-the-counter sales of public bonds, including government bonds, and securities investment trusts

5 . trust business for secured corporate bonds

6 . Agency business

➀ Revenue agency for Bank of Japan and agency business for government bonds

➁ Handling of funds for regional public entities in tokyo and elsewhere

➂ Japan Finance Corporation; Organization for workers’ Retirement Allowance Mutual Aid;

Government Pension investment Fund; Japan Oil, Gas and Metals National Corporation; and

welfare and Medical Service Agency

7 . Custody services and rental of safe deposit boxes

8 . interest rate, currency and other derivatives transactions

9 . Over-the-counter sales of insurance products

10 . Financial instruments intermediary business

Business Activities (As of January 1, 2011)

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20

Financial and

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Corporate Data

Organization Chart (As of January 1, 2011)

Retail & BusinessBanking Group

CorporateBanking Group

SpecialtyFinance Group

Integrated RiskManagement

Group

FinanceGroup

Technology &Operations

Group

Business Banking Planning Div. (Facilitation of Financing Promotion Office)

Retail Operation & Technology Div.

Retail Products & Marketing Div.

Retail Business Planning Div.

Direct Banking Div.

Metropolitan Business Div. I

Metropolitan Business Div. II

Personal Loan Div.

Retail & Institutions Banking Div.

Internet Br.

Corporate Banking Management Div.

Corporate Banking Services Div.

Syndication & Securitization Div.

Corporate Business DivisionII, III, IV

Public Institutions Division

Acquisition & Project Finance Div.

Aozora Investment Co., Ltd.

Special Situations Div.

Real Estate Finance Div.

Real Estate Structured Debt Div.

Corporate Business Div. I

Corporate Business Div. V

Asset Finance Div.

Leveraged Finance Div.

Aozora Asia Pacific Finance Limited

Aozora Loan Services Co., Ltd.

TreasuryFunding Div.

Treasury Investment Div.

Market Products Div.

Derivatives Sales Div.

Aozora Securities Co., Ltd.

Financial Institutions Management Div.

Financial InstitutionsDiv. I

Financial InstitutionsDiv. II

Aozora Trust Bank, Ltd.

Financial Control Div.

Financial Management Div.

Financial Reporting Control Div.

Corporate Communication Div.

Operations Management Div.

Crisis Management Div.

IT Control Div.

ApplicationManagement Div.

Infrastructure Management Div.

Banking Administration Div.

Markets & International Administration Div.

Integrated Risk Management Div.

Market RiskManagement Div.

Legal & Compliance Div.Corporate Administration & Service Div.

Head of Compliance & Governance

Head of Human Resources

Deputy President

President

Chairman

OCE

Office of Chief Executive

Corporate Strategy Officer

Business Strategy Div. Office of Corporate SecretaryOverseas Representative Offices(New York, Shanghai)

Human Resources Div.

Board of Directors

ShareholdersCorporateAuditors

Board of Corporate Auditors

Corporate AuditorsDivision

Asset Assessment Div.

Internal Audit Div.

[Branches]Kansai Br., Nagoya Br., Fukuoka Br., Sendai Br., Sapporo Br., Hiroshima Br., Takamatsu Br., Kanazawa Br.

Shinjuku Br., Nihonbashi Br., Shibuya Br., Ueno Br., Ikebukuro Br., Yokohama Br., Chiba Br., Osaka Br., Umeda Br., Kyoto Br.

FinancialInstitution Group

FinancialMarkets Group

Group Head Group Head Group Head ChiefRisk

Officer(CRO)

ChiefFinancial

Officer(CFO)

ChiefTechnology

Officer(CTO)

Credit RiskManagement

Group

Credit RiskManagementDiv.

Credit Div. I

Credit Div. II

Credit Div. III(Facilitation of Financing Review Office)

Workout Div.

ChiefCredit Risk

Officer(CCRO)

Group Head Group Head

Co

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21

Financial and

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Directors, Auditors and Executive Officers (As of January 1, 2011)

Directors and Auditors

Chairman yuji Shirakawa*

President Brian F . Prince*

Deputy President Kunimi tokuoka*

Shinsuke Baba*

Directors James Danforth Quayle

Frank w . Bruno

lawrence B . lindsey

Kiyoshi tsugawa

Marius J . l . Jonkhart

lee Millstein

Shunsuke takeda

Cornelis Maas

Standing Corporate Auditor Shinichi Fujihira

Corporate Auditors Mitch R . Fulscher

Akira tachimoto

* Serving as Executive Officer concurrently

Executive Officers

Senior Managing Executive Officers takeyoshi Morikawa

Masaki tanabe

Managing Executive Officers Hirokazu takino

Hiromi watanabe

Michiko Achilles

tetsuo Sakamoto

Marc J . Kutik

Executive Officers tadashi umino

Katsuya Hosono

william C . Hunter

takeo Saito

tetsuji tanami

Norman King

Staff Profile (As of September 30, 2010)

Number of Employees Average Age Average years of Service

1,497 (339) 39 .8 13 .7

Notes: 1 . the number of employees includes executive officers and locally hired staff overseas, but excludes temporary employees . 2 . the figure in parentheses is the average number of temporary employees for the year .

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Financial and

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Corporate Data

Office Directory (As of January 1, 2011)

Overseas Network

● Representative Offices

New York Representative Office

Chief RepresentativeMasaki Onuma

Address780 third Avenue, 11th Floor, New york, Ny 10017, u .S .A . tel: +1-212-759-3900Fax: +1-212-759-3911

Ueno

6-12, ueno 2-chome, taito-ku, tokyo 110-0005tel: 03-3835-7511

Ikebukuro

28-13, Minami-ikebukuro 2-chome, toshima-ku, tokyo 171-0022tel: 03-3988-0911

Chiba

3-1, Fujimi 2-chome, Chuo-ku, Chiba 260-0015tel: 043-227-3111

Yokohama

4-1, Kita-saiwai 1-chome, Nishi-ku, yokohama 220-0004tel: 045-319-1588

Kanazawa

2-37, Kamitsutsumicho,Kanazawa 920-0869tel: 076-231-4151

Nagoya

5-28, Meieki 4-chome, Nakamura-ku, Nagoya 450-0002tel: 052-566-1900

Kyoto

Muromachi-Higashiiru, Shijo-dori, Shimogyo-ku, Kyoto 600-8009tel: 075-211-3341

Kansai

5-7, Honmachi 3-chome,Chuo-ku, Osaka 541-0053tel: 06-6263-2512(Kansai Branch deals solely with corporate clients .)

Osaka

2-3, Namba 2-chome, Chuo-ku, Osaka 542-0076tel: 06-4708-2051

Umeda

8-47, Kakutacho, Kita-ku, Osaka 530-0017tel: 06-6315-1111

Hiroshima

13-13, Motomachi, Naka-ku, Hiroshima 730-0011tel: 082-211-0125

Takamatsu

6-1, Bancho 1-chome,takamatsu 760-0017tel: 087-821-5521

Fukuoka

14-18, tenjin 1-chome, Chuo-ku, Fukuoka 810-0001tel: 092-751-9627

Internet Branch

3-1, Kudan-minami 1-chome,Chiyoda-ku, tokyo 102-8660http: //www .aozorabank .co .jp/netbranch/

Domestic Network

● HEAD OFFICE3-1, Kudan-minami 1-chome,Chiyoda-ku, tokyo 102-8660, Japantel: +81-3-3263-1111SwiFt: NCBtJPJt

● BRANCH OFFICESSapporo

1-4, Kita Sanjo-nishi 4-chome,Chuo-ku, Sapporo 060-0003tel: 011-241-8171

Sendai

2-1, Chuo 3-chome, Aoba-ku, Sendai 980-0021tel: 022-225-1171

Shinjuku

37-11, Shinjuku 3-chome,Shinjuku-ku, tokyo 160-0022tel: 03-3354-1600

Nihonbashi

3-11, Nihonbashi 3-chome, Chuo-ku, tokyo 103-0027 tel: 03-3517-7888

Shibuya

24-12, Shibuya 1-chome, Shibuya-ku, tokyo 150-0002tel: 03-3409-6411

Shanghai Representative Office

Chief RepresentativeMasakazu Arai

Addressunit 3511, CitiC Square, 1168 Nanjing Road west, Shanghai 200041, P .R . of Chinatel: +86-21-5117-8952Fax: +86-21-5117-8953

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Business Network (As of September 30, 2010)

Subsidiaries (As of September 30, 2010)(%)

Aozora Bank Group Company Name Location Business Activities Established Capital Shareholding Shareholding

Aozora trust Bank, ltd . 3-1, Kudan-minami 1-chome, trust services, February 28, 5,437 100 .0 — Chiyoda-ku, tokyo banking operations 1994 millions of JPy

AOzORA loan Services 13-5, Kudan-kita 1-chome, Distressed loan June 18, 500 67 .6 — Co ., ltd . Chiyoda-ku, tokyo servicing 1996 millions of JPy

Aozora investment Co ., ltd . 3-1, Kudan-minami 1-chome, venture capital May 17, 20 100 .0 — Chiyoda-ku, tokyo investment 1991 millions of JPy

Aozora Securities Co ., ltd . 17-11, Kanda-nishikicho 3-chome, Securities services April 27, 3,000 100 .0 — Chiyoda-ku, tokyo 2006 millions of JPy

AzuRE Funding Cayman islands, investment vehicle August 6, 0 — — North America i British west indies 2004 thousands of uSD

Aozora Asia Pacific Hong Kong Financial services June 29, 100,000 100 .0 — Finance limited 2005 thousands of uSD

Azure Funding Europe S .A . luxembourg investment vehicle April 3, 31 100 .0 — 2006 thousands of EuR

AzuRE Funding Cayman islands, investment vehicle October 10, 0 — — North America ii British west indies 2006 thousands of uSD

Aozora GMAC london investments November 6, 530,070 100 .0 — investment limited 2006 thousands of uSD

Aozora investment, inc . Delaware, uSA investments November 21, 411 — 100 .0 2006 thousands of uSD

Aozora investments llC Delaware, uSA investments November 22, 500,282 — 100 .0 2006 thousands of uSD

AzB ClO1 limited Dublin, ireland investment vehicle December 10, 0 — — 2008 thousands of EuR

AzB ClO2 limited Dublin, ireland investment vehicle December 10, 0 — — 2008 thousands of EuR

AzB ClO3 limited Dublin, ireland investment vehicle December 10, 0 — — 2008 thousands of EuR

AzB ClO4 limited Dublin, ireland investment vehicle December 10, 0 — — 2008 thousands of EuR

Kitanomaru Holdings 1-1, Marunouchi 3-chome, Financial services November 18, 3 — — Chiyoda-ku, tokyo 2008 millions of JPy

Sheltie 1-1, Marunouchi 3-chome, Financial services December 1, 0 — — Chiyoda-ku, tokyo 2008 millions of JPy

*All companies listed below are consolidated subsidiaries .

Aozora Bank, Ltd.CNCBALP

Parent Company

Banking operations

Other operations

Head Office and branches

Main affiliates

Head Office and branches

Main affiliates

Investment vehicleInvestment vehicleInvestment vehicleInvestment vehicleFinancial servicesInvestmentsInvestmentsInvestmentsFinancial servicesFinancial services

Trust servicesDistressed loan servicingSecurities servicesVenture capital investment

AzB ClO1 limitedAzB ClO2 limitedAzB ClO3 limitedAzB ClO4 limitedAozora Asia Pacific Finance limited Aozora GMAC investment limitedAozora investment, inc .Aozora investments llC Kitanomaru HoldingsSheltie

Aozora trust Bank, ltdAOzORA loan Services Co ., ltd .Aozora Securities Co ., ltd .Aozora investment Co .,ltd .

Note: ‘CNCBAlP’ is Cerberus NCB Acquisition, l .P ., General Partner Cerberus Aozora GP llC .

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Share Procedure Information

● Fiscal year From April 1 to March 31

● Ordinary general shareholders’ meeting Held in June

● Record date for determination March 31 and September 30 (interim dividends)

of dividends

● Record date Ordinary General Shareholders’ Meeting: March 31 (also to be held in other

cases as deemed necessary, whereby the record date will be set and advance

notice given) .

● Public notifications Electronic public notice via the internet . in the event that public notice cannot

be made via the internet, the Nihon Keizai Shimbun will be used .

● Listed on the First Section of the tokyo Stock Exchange

● Securities code 8304

● Number of shares 1,000 shares

constituting one unit (Tan-gen)

● Manager of register of the Sumitomo trust and Banking Co ., ltd .

shareholders and administrator 5-33, Kitahama 4-chome, Chuo-ku, Osaka

of the ‘special account’

● Manager of register of Stock transfer Agency Department,

shareholders’ location the Sumitomo trust and Banking Co ., ltd .

3-1, yaesu 2-chome, Chuo-ku, tokyo

(Mailing address) Stock transfer Agency Department, the Sumitomo trust and Banking Co ., ltd .

1-10, Nikkocho, Fuchu City, tokyo 183-8701

(Contact number) 0120-176-417 (toll free)

● Inquiries regarding shares and notification of changes

we ask that shareholders direct all inquiries, including change of address, to their securities company . For those

shareholders who do not have an account with a securities firm, inquiries should be directed to the agent above .

● Regarding the ‘special account’

Prior to the implementation of the electronic share certificate system in Japan, an account was established with the

Sumitomo trust and Banking Co ., ltd ., for shareholders who did not use JASDEC’s hofuri system . Such shareholders

should direct all matters related to change of address and other inquiries to the agent above .

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Consolidated Business Results

Consolidated Financial Highlights For the six-month periods ended September 30, 2010, 2009 and 2008, and the years ended March 31, 2010 and 2009

(Millions of yen)

Sep. 30, 2010 Sep. 30, 2009 Sep. 30, 2008 Mar. 31, 2010 Mar. 31, 2009

Ordinary income . . . . . . . . . . . . . . . . . . . . . . . . 69,756 77,928 116,777 146,058 182,566

Ordinary profit (loss) . . . . . . . . . . . . . . . . . . . . . 15,381 7,667 (35,577) 6,482 (232,053)

Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . 14,177 6,456 (28,041) 8,303 (242,553)

Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 419,781 419,781 419,781 419,781 419,781

total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 555,129 539,919 728,237 538,713 529,607

total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,986,277 5,529,239 6,803,490 5,157,322 6,077,330

Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . 340,378 918,707 2,025,297 562,122 1,489,693

Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,979,886 3,014,352 3,017,800 3,087,573 2,909,834

loans and bills discounted . . . . . . . . . . . . . . . . 2,831,814 3,334,086 4,260,429 3,070,235 3,484,945

Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,312,834 1,299,454 1,474,445 1,276,311 1,126,595

total equity per share (yen) . . . . . . . . . . . . . . . . 251 .01 240 .86 332 .21 238 .60 232 .51

Basic net income (loss) per share (yen) . . . . . . . 9 .48 4 .32 (16 .99) 4 .10 (150 .92)

Diluted net income per share (yen) . . . . . . . . . . . 7 .23 3 .29 — 3 .95 —

Consolidated capital adequacy ratio (domestic standard) (%) . . . . . . . . . . . . . . . . . . 15 .57 13 .13 13 .68 14 .03 11 .60

Net cash provided by (used in) operating activities . . . . . . . . . . . . . . . . . . . . . (28,563) (281,584) (51,474) (219,626) 164,226

Net cash provided by (used in) investing activities . . . . . . . . . . . . . . . . . . . . . . (42,378) (163,189) 138,110 (158,107) 398,158

Net cash provided by (used in) financing activities . . . . . . . . . . . . . . . . . . . . . . (3,515) (2,474) (8,110) (4,070) (23,978)

Cash and cash equivalents, end of year . . . . . . . 112,754 121,768 109,136 187,213 569,017

Notes: 1 . total equity per share, basic net income per share and diluted net income per share are calculated by applying Financial Accounting Standard No . 2, ‘Accounting Standard for Earnings per Share’ and Financial Accounting Standards implementation Guidance No . 4, ‘implementation Guidance for Accounting Standard for Earnings per Share .’

2 . Although potentially dilutive shares exist, diluted net income per share is not shown for the six-month period ended September 30, 2008 and the year ended March 31, 2009, as a net loss is recorded for these periods .

3 . Deposits include negotiable certificates of deposit (NCDs) .

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Consolidated Financial Review

1. Consolidated and Equity-Method Companies

During the six-month period ended September 30, 2010,

there was no change in the scope of subsidiaries .

No subsidiaries or affiliated companies were accounted

for using the equity method .

2. Analysis of Business Results

in the first half of Fy2010, the Bank recorded consolidated net

revenue* of ¥42 .1 billion . while flat relative to the previous

year, net revenues increased by ¥4 .7 billion in real terms year

on year when adjusted for a one-time gain of ¥4 .6 billion on

CDS hedging transactions included in the last year’s results .

* Consolidated net revenue = (interest income – interest expenses) + (Fees and commissions income – Fees and commissions expenses) + (trading income – trading expenses) + (Other ordinary income – Other ordinary expenses)

(1) Income

total income for the first half of Fy2010 decreased by

¥8 .3 billion year on year to ¥70 .1 billion .

interest income decreased by ¥6 .5 billion to ¥39 .9 billion,

due to a decrease in interest on loans and discounts of

¥6 .0 billion .

Fees and commissions income decreased by ¥2 .6 billion to

¥5 .8 billion, due to the absence of large transactions that

contributed to the previous year’s results .

trading income decreased by ¥4 .3 billion to ¥5 .8 billion,

mainly because the previous year’s results included the afore-

mentioned one-time gain of ¥4 .6 billion on a CDS hedging

transaction .

Other ordinary income increased by ¥4 .5 billion to ¥16 .2

billion, mainly due to gains on the sale of JGBs and foreign

government bonds, as well as gains from the redemption of

hedge funds .

Other income increased by ¥0 .6 billion to ¥2 .4 billion .

Consolidation and Equity-Method Companies (Number of Companies)

Sep. 30, 2010 Mar. 31, 2010 Change

Consolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 17 0

Subsidiaries and affiliated companies accounted for using the equity method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 0

(Millions of yen)

Sep. 30, 2010 Sep. 30, 2009 (6 months) (6 months) Change

Total income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,059 78,371 (8,312)

interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,897 46,411 (6,514) interest on loans and discounts . . . . . . . . . . . . . . . . . . . . . . . . . . 29,815 35,845 (6,030) interest and dividends on securities . . . . . . . . . . . . . . . . . . . . . . . 7,379 7,676 (297) interest on due from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 96 (33) Other interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,638 2,794 (156)

Fees and commissions income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,776 8,342 (2,566)

trading income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,818 10,164 (4,346)

Other ordinary income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,164 11,636 4,528 Gains on sales of bonds and other securities . . . . . . . . . . . . . . . 11,916 6,841 5,075 Gains on derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 166 (166) Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,248 4,628 (380)

Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,401 1,815 586 Gains on sales of stocks and other securities . . . . . . . . . . . . . . . 0 44 (44) Recoveries of written-off claims . . . . . . . . . . . . . . . . . . . . . . . . . . 302 414 (112) Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,098 1,355 742

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(2) Expenses

total expenses decreased by ¥15 .0 billion over the same

period in the last year, to ¥55 .4 billion .

interest expenses decreased by ¥6 .8 billion to ¥16 .5 billion,

mainly due to decreased interest on debentures .

Other ordinary expenses decreased by ¥2 .1 billion, to

¥8 .6 billion, due to the absence of investment losses related

to real estate, venture capital limited partnerships, and other

investments, which were included in ‘Other’ of ‘Other

ordinary expenses .’

General and administrative expenses decreased by ¥2 .0

billion year on year, to ¥20 .3 billion . this result reflected the

continuation of strict cost controls, including the implementa-

tion of a Bank-wide cost review which led to broad savings

in personnel, technology and other operating expense

categories .

Other expenses decreased by ¥4 .1 billion to ¥9 .5 billion,

mainly due to decreased credit-related expenses .

(3) Net Income

As a result of the factors outlined above, income before income

taxes and minority interests increased by ¥6 .7 billion to ¥14 .7

billion .

(Millions of yen)

Sep. 30, 2010 Sep. 30, 2009 (6 months) (6 months) Change

Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,365 70,362 (14,997)

interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,472 23,258 (6,786) interest on deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,937 13,326 (1,389) interest on debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,578 7,109 (4,531) interest on borrowings and rediscounts . . . . . . . . . . . . . . . . . . . . 326 973 (647) Other interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,629 1,849 (220)

Fees and commissions expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 455 555 (100)

trading expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 — 8

Other ordinary expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,621 10,688 (2,067) Amortization of debenture issuance costs . . . . . . . . . . . . . . . . . . 32 115 (83) losses on sales of bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212 54 158 losses on devaluation of bonds and other securities . . . . . . . . . . 4,228 264 3,964 losses on derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 — 98 losses on foreign exchange transactions . . . . . . . . . . . . . . . . . . 2,383 4,726 (2,343) Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,665 5,527 (3,862)

General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . 20,294 22,267 (1,973)

Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,513 13,593 (4,080) Provision of allowance for loan losses . . . . . . . . . . . . . . . . . . . . . 5,122 6,500 (1,378) Provision of allowance for credit losses on off-balance-sheet instruments . . . . . . . . . . . . . . . . . . . . . . . . . . 105 — 105 write-off of loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,886 4,130 (2,244) losses on sales of socks and other securities . . . . . . . . . . . . . . . 1 102 (101) losses on devaluation of stocks and other securities . . . . . . . . . 13 — 13 losses on disposal of noncurrent assets . . . . . . . . . . . . . . . . . . . 62 99 (37) Other extraordinary losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 927 — 927 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,395 2,760 (1,366)

(Millions of yen)

Sep. 30, 2010 Sep. 30, 2009 (6 months) (6 months) Change

Income before income taxes and minority interests . . . . . . . . . . . . 14,693 8,008 6,685

Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 479 1,549 (1,070)

Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338 438 (100) Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 1,111 (970)

Minority interests in net income . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 2 34

Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,177 6,456 7,721

total income taxes improved by ¥1 .1 billion year on year to

an expense of ¥0 .5 billion .

As a result of the above factors, consolidated net income for

the first half of Fy2010 increased by ¥7 .7 billion year on year to

¥14 .2 billion .

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3. Analysis of Financial Condition

(1) Loans and bills discounted

loans decreased ¥238 .4 billion to ¥2,831 .8 billion from

March 31, 2010, as the Bank continued to reduce the

balance of overseas loans, as well as domestic unsecured

loans, and maintained a conservative approach to new

lending given the uncertain financial environment . in

comparison to March 31, 2010, lending to local govern-

ments increased by ¥12 .3 billion, while overseas loans,

lending to the finance/insurance sector and various

services decreased by ¥75 .4 billion, ¥45 .2 billion and

¥25 .4 billion, respectively . while lending to the real estate

sector decreased by ¥16 .7 billion, non-recourse loans

increased by ¥6 .0 billion .

Risk-monitored loans on a consolidated basis in this

period decreased by ¥27 .5 billion to ¥148 .1 billion and the

ratio to the loan balance decreased by 0 .5% to 5 .2% .

Adequate security and reserves have been taken for

these loans .

the breakdown of outstanding loans and bills

discounted by industry and outstanding risk-monitored

loans and bills discounted by industry are shown in the

following tables .

Risk-Monitored Loans (Consolidated) (Millions of yen)

Sep. 30, 2010 Mar. 31, 2010 Change

Risk-monitored loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148,134 175,584 (27,450)

loans to bankrupt companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,615 40,249 (24,634) Past due loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89,495 93,331 (3,836) Restructured loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,023 42,003 1,020

Loan balance (end of period) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,831,814 3,070,235 (238,421)

Ratio to loan balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2% 5.7% (0.5%)

Breakdown of Outstanding Loans and Bills Discounted by Industry and Risk-Monitored Loans and Bills Discounted Outstanding by Industry (Consolidated) (Millions of yen)

Sep. 30, 2010 Mar. 31, 2010

Loans and Risk-monitored Loans and Risk-monitored bills discounted loans bills discounted loans

Loans by domestic offices (excluding Japan offshore market accounts) . . . . . . . . . . . . . . . . . 2,601,755 121,999 2,764,788 138,278

Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243,082 3,599 244,158 2,934 Agriculture, forestry and fisheries . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,551 — 4,122 — Mining, quarry, gravel extraction . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,103 — 4,847 — Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,691 530 37,599 910 Electricity, gas, heat supply and water . . . . . . . . . . . . . . . . . . . . . . . 10,406 — 11,686 — information and communications . . . . . . . . . . . . . . . . . . . . . . . . . . 72,760 73 90,189 339 transport, postal service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158,417 5,087 167,789 4,876 wholesale and retail trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153,548 816 159,031 1,026 Finance and insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 413,009 40,217 458,223 55,956 Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 907,357 20,969 924,088 27,531 leasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98,441 — 123,377 111 various services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162,499 19,738 187,884 21,552 local government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82,318 — 69,988 — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259,566 30,966 281,800 23,039

Loans by overseas offices and Japan offshore market accounts . . . 230,058 26,135 305,447 37,306 Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — Financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230,058 26,135 305,447 37,306

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,831,814 148,134 3,070,235 175,584

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an increase in foreign bonds, mainly u .S . treasury bonds of

¥24 .9 billion, and the additional purchase of money market

funds, assets comparable to the liquidity reserve .

(3) Deferred tax assets

the balance of deferred tax assets decreased by ¥4 .7

billion to ¥36 .0 billion from March 31, 2010 . we calculated

the amount of deferred tax assets on the basis of an esti-

mated taxable income for subsequent three fiscal years .

the proportion of deferred tax assets to net assets was

6 .5% as of September 30, 2010 .

(4) Deposits, debentures and corporate bonds

Deposits decreased by ¥90 .4 billion compared to March 31,

2010 . Negotiable certificates of deposit decreased by

¥17 .2 billion . Debentures decreased by ¥221 .7 billion .

Funding from retail customers was basically unchanged at

¥2,350 .8 billion .

(2) Securities

Securities increased by ¥36 .5 billion in comparison with

March 31, 2010 to ¥1,312 .8 billion . Major factors in this

change were a decrease in JGBs of ¥57 .9 billion, offset by

Outstanding Balance of Securities Held (Consolidated) (Millions of yen)

Sep. 30, 2010 Mar. 31, 2010 Change

Japanese debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 802,911 846,230 (43,319)

Japanese national government bonds . . . . . . . . . . . . . . . . . . . . . . . 736,062 794,009 (57,947) Japanese local government bonds . . . . . . . . . . . . . . . . . . . . . . . . . 3,703 5,030 (1,327) Japanese corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,146 47,189 15,957

Japanese stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,209 27,291 (82)

Other securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 482,713 402,790 79,923

Foreign securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 361,790 264,354 97,436 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,922 138,436 (17,514)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,312,834 1,276,311 36,523

Deposits, Debentures and Corporate Bonds (Consolidated) (Millions of yen)

Sep. 30, 2010 Mar. 31, 2010 Change

Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,979,886 3,087,573 (107,687)

time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,602,291 2,700,905 (98,614) liquid deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 355,705 357,432 (1,727) Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,889 29,234 (7,345)

Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 340,378 562,122 (221,744)

Bonds payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91,195 91,192 3

Note: the total of deposits and time deposits includes negotiable certificates of deposit (NCDs) .

(5) Equity

the balance of total equity increased by ¥16 .4 billion from the

previous fiscal year end to ¥555 .1 billion, reflecting the posi-

tive earnings and an improvement in the valuation difference

on available-for-sale securities .

there were no changes in capital stock and capital surplus .

(6) Capital adequacy ratio (consolidated, domestic standard)

the consolidated BiS capital adequacy ratios were calculated

pursuant to the Basel ii regulations .

the balance of regulatory capital stood at ¥505 .8 billion .

the balance of risk-weighted assets was ¥3,247 .9 billion .

As a result, the consolidated capital adequacy ratio in

accordance with the domestic standard increased by 1 .54%,

to 15 .57%, and the tier 1 ratio was 16 .70%, which are

among the highest in the Japanese banking industry .

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4. Consolidated Capital Adequacy Ratio (Domestic Standard) (Millions of yen)

Sep. 30, 2010 Mar. 31, 2010

Tier I Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 419,781 419,781 Non-cumulative perpetual preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . 167,315 167,315 Newly issued stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,333 33,333 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113,832 102,902 treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,650 15,650 Paid-in amount on treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — unappropriated profits to be distributed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 3,219 valuation loss on available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . — — Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,441) (8,409) Subscription rights to shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Minority interests in consolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . 709 697 Preferred stock issued by overseas special purpose companies . . . . . . . . . — — Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Amount equal to goodwill derived from acquisitions . . . . . . . . . . . . . . . . . . . . — — intangible assets derived from mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Amount equivalent to capital increased by securitization transactions . . . . . . . — — Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (A) 542,564 529,435 Step-up preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —

Tier II Forty-five percent of the difference between fair value and book value in respect of land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — General allowance for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,299 21,734 Subordinated debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Perpetual subordinated liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Subordinated term liabilities and subordinated term preferred stock . . . . . . — — Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,299 21,734 Tier II capital qualifying as capital . . . . . . . . . . . . . . . . . . . . . . . . (B) 20,299 21,734

Tier III Short-term subordinated debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Tier III capital qualifying as capital . . . . . . . . . . . . . . . . . . . . . . . . (C) — —

Items deducted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (D) 57,020 63,228

Regulatory capital (A) + (B) + (C) – (D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (E) 505,843 487,941

Risk-weighted Balance-sheet exposure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,799,723 2,991,156 assets Off-balance-sheet exposure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236,933 238,827 Credit risk assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (F) 3,036,657 3,229,984 Risk assets derived from market risk equivalents ((H)/8%) . . . . . . . . . (G) 112,939 135,748 Market risk equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (H) 9,035 10,859 Risk assets derived from operational risk equivalents ((J)/8%) . . . . . . ( I ) 98,254 111,843 Operational risk equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (J) 7,860 8,947 (F) + (G) + ( I ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (K) 3,247,851 3,477,576

Capital adequacy ratio (Domestic standard) × 100 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.57% 14.03%

Tier I ratio (Domestic standard) × 100 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.70% 15.22%

Required capital total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129,914 139,103

Notes: 1 . the capital adequacy ratio is calculated using the formula stipulated in a ministerial notification based on Article 14-2 of the Banking law (FSA Notification Number 19, issued in 2006) . FSA Notification Number 79, issued on 2008, is also applied for calculation .

Aozora uses the domestic standard applicable to Japanese banks without overseas branches or banking subsidiaries . the capital adequacy ratios are based on the FSA guidelines established to implement Basel ii . 2 . items deducted (D) include the amount held at other financial institutions for their capital-raising purposes and the amount of our investments in

non-consolidated subsidiaries and affiliated companies . 3 . Methods used to calculate risk-weighted assets are as follows: credit risk assets use the standardized approach; market risk equivalents use the

internal models approach and the standardized approach; operational risk equivalents use the standardized approach . 4 . Amounts of required capital for each risk are as follows: (Millions of yen)

Sep. 30, 2010 Mar. 31, 2010

Credit risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121,466 129,199 Market risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,517 5,429 Operational risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,930 4,473

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5. Disclosure of Exposure to Securitized Products

Based on ‘the Financial Stability Forum (FSF, currently Financial Stability Board (FSB)) Report on Enhancing Market and institutional Resilience’ published by FSF in April 2008, Aozora Bank discloses its exposures to securitized prod-ucts, regarding CDOs, RMBSs, CMBS, other SPEs and leveraged finances as follows .

Please note that there is no clear definition or common market practice about these instruments/transactions and, therefore, some of the numbers and information in the attached disclosure are based on our internal definitions . Hence, you may not be able to compare our disclosure with those from other banks .

(1) Special Purpose Entities (SPE)—General (unit: 100 million JPy)

As of September 30, 2010 Exposure of the Group for SPEs Asset size of SPEs

1 . SPE related to securitization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 1792 . SPE related to distressed loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 322 3243 . Other SPE or limited Partnerships (including Private Equities) . . . . . . . . 48 337

Note: the scope of SPEs included in the exposure of the Group and Assets size above is as follows . the following disclosure does not include the figures and information related to the SPEs within the Bank’s scope of consolidation or equity method .

•SPEtheBankoriginatedforCLOs. •Partnership(includingTokumeiKumiai(‘TK’)silentpartnership)wheretheGroupentityactsasGeneralPartner. •Partnership(includingTK)wheretheotherthanGroupentityactsasGeneralPartnerandtheGroupinvests50%ormoreoftotalinvestment.

(unit: 100 million JPy)

As of September 30, 2010 Exposure of the Group for SPEs Asset size of SPEs

Partnerships (or tK) that the Group entity operates . . . . . . . . . . . . . . . . . . 317 317Partnerships (or tK) that the third party operates (the Group invests 50% or more of the total investment) . . . . . . . . . . . . . 4 6

(unit: 100 million JPy)

As of September 30, 2010 Exposure of the Group for SPEs Asset size of SPEs

Partnerships the Group entity operates as General Partner . . . . . . . . . . . . 48 337Partnerships the third party operates as General Partner (the Group invest 50% or more of the total investment) . . . . . . . . . . . . . . — —

(2) Other Subprime and Alt-A Exposure

Not applicable

1 . SPEs related to securitizationthe Bank originated these SPEsNature of underlying assets is as follows: type of underlying assets: loans location of underlying assets: Japan Average remaining period of underlying assets: 0 .2 year Rating of underlying assets: No external rating

2 . SPEs related to distressed loansthese SPEs include partnerships (or tK) operated by the Group entity as well as the third party and the breakdown is as follows:

3 . Other SPE or limited Partnership (including Private Equities)these SPEs include partnerships (investment business limited partnership) or limited Partnerships (thereafter “partnerships”) the Group operates as a General Partner and partnerships the third party operates as a General Partner .

Nature of assets the partnership (or tK) holds is as follows: type of assets: Distressed loans with collaterals location of assets: Japan

Nature of assets the partnerships hold is as follows: Assets: Mainly unlisted securities locations: Mainly Japan

(3) CDO (Collateralized Debt Obligation) Exposure (unit: 100 million JPy)

Type of CDO Acquisition cost Accumulated write-off Fair value as of Sep. 30, 2010

ABS CDO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270 (269) 3Siv CDO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Synthetic CDO . . . . . . . . . . . . . . . . . . . . . . . . . . — — —trust Preferred CDO . . . . . . . . . . . . . . . . . . . . . . 3 (3) 0

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 274 (272) 3

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loan balance . . . . . . . . . . . . . . . . . . . . . 3,220Commitment line (unfunded) . . . . . . . . . . 218

total leverage finance . . . . . . . . . . . . . . . 3,438

(4) CMBS (Commercial Mortgage-Backed Securities)Changes in CMBS balance of the Group is as follows: (unit: 100 million JPy)

Sep. 30, 2010

CMBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 403

Breakdown of book value per type of CMBS as of September 30, 2010 is as follows: (unit: 100 million JPy)

Type Book value Share

Single borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170 42 .2%Multi borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216 53 .6%Sales type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 4 .2%

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 403 100 .0%

Breakdown of book value per type of asset of CMBS as of September 30, 2010 is as follows: (unit: 100 million JPy)

Type of asset Book value Share

Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174 43 .1%Residence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 2 .9%Commercial buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 0 .6%Storage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —Hotels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214 53 .2%Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 .2%

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 403 100 .0%

location of CMBS as of September 30, 2010 is as follows: (unit: 100 million JPy)

Country Book value Share

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239 59 .4%u .S .A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164 40 .6%

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 403 100 .0%

(5) RMBS (Residential Mortgage-Backed Securities)RMBS the Group holds in its portfolio as of September 30, 2010 is as follows: (unit: 100 million JPy)

Balance Underlying assets Country Rating Type of RMBS

55 Residential mortgage Japan Aaa or AAA trust beneficiary right

(6) Leveraged Financethe exposure of the Group to leverage finance is as follows:Note: the following amount is the aggregated amount of loan balance rendered for M&A finance (including refinance for M&A deals in the past) . it excludes

loans that are investment grade or of equivalent rating .

Geographical distribution as of September 30, 2010

(unit: 100 million JPy)

Leveraged Finance

North America . . . . . . . . . . . . . . . . . . . . 1,180 Europe . . . . . . . . . . . . . . . . . . . . . . . . . . 637 Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,303Oceania . . . . . . . . . . . . . . . . . . . . . . . . . 266 Middle east . . . . . . . . . . . . . . . . . . . . . . . —

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,438

Distribution by industry as of September 30, 2010

(unit: 100 million JPy)

Leveraged Finance

Manufacturing . . . . . . . . . . . . . . . . . . . . 802Agriculture, forestry and fisheries . . . . . . —Mining, quarry, gravel extraction . . . . . . . 10Construction . . . . . . . . . . . . . . . . . . . . . 149utilities . . . . . . . . . . . . . . . . . . . . . . . . . . 43information and communications . . . . . . 811transport, Postal service . . . . . . . . . . . . . 281wholesale and retail . . . . . . . . . . . . . . . . 290Financial and insurance . . . . . . . . . . . . . . 216Real estate . . . . . . . . . . . . . . . . . . . . . . . 12leasing . . . . . . . . . . . . . . . . . . . . . . . . . . 26various services . . . . . . . . . . . . . . . . . . . 794

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,438

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Consolidated Balance Sheets (Unaudited)Aozora Bank, ltd . and Consolidated SubsidiariesAs of September 30, 2010 and 2009, and March 31, 2010

Thousands of U.S. Dollars Millions of Yen (Note 1)

ASSETS Sep. 30, 2010 Sep. 30, 2009 Mar. 31, 2010 Sep. 30, 2010

Cash and cash equivalents (Notes 4 and 23) . . . . . . . . . . . . . . . . . . . . ¥ 112,754 ¥ 121,768 ¥ 187,213 $ 1,345,202Due from banks (Notes 13 and 23) . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,311 51,914 56,598 624,098Call loans and bills bought (Note 23) . . . . . . . . . . . . . . . . . . . . . . . . . . 110,000 100,000 50,000 1,312,336Monetary claims bought (Note 23) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,971 76,369 63,809 751,274trading assets (Notes 5, 23 and 24) . . . . . . . . . . . . . . . . . . . . . . . . . . 388,458 374,128 301,662 4,634,435Money held in trust (Notes 7 and 23) . . . . . . . . . . . . . . . . . . . . . . . . . . 10,087 6,590 7,026 120,345Securities (Notes 6, 13 and 23) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,312,834 1,299,454 1,276,311 15,662,546loans and bills discounted (Notes 8, 13 and 23) . . . . . . . . . . . . . . . . . 2,831,814 3,334,086 3,070,235 33,784,468Foreign exchange (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,462 18,517 13,448 160,612Other assets (Notes 13, 16 and 23) . . . . . . . . . . . . . . . . . . . . . . . . . . . 112,354 186,113 160,228 1,340,431tangible fixed assets (Note 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,488 24,026 23,359 280,221intangible fixed assets (Note 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,801 8,362 7,717 81,147Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,974 35,889 40,657 429,182Customers’ liabilities for acceptances and guarantees (Note 11) . . . . . 26,080 22,840 26,231 311,149Allowance for loan losses (Note 12) . . . . . . . . . . . . . . . . . . . . . . . . . . . (104,774) (116,800) (118,941) (1,249,999)Allowance for investment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,341) (14,023) (8,235) (99,523)

tOtAl . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥4,986,277 ¥5,529,239 ¥5,157,322 $59,487,924

Thousands of U.S. Dollars Millions of Yen (Note 1)

LIABILITIES AND EQUITY Sep. 30, 2010 Sep. 30, 2009 Mar. 31, 2010 Sep. 30, 2010

LIABILITIES: Deposits (Notes 13, 14 and 23) . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥2,979,886 ¥3,014,352 ¥3,087,573 $35,551,017 Debentures (Notes 15 and 23) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 340,378 918,707 562,122 4,060,832 Call money and bills sold (Notes 13 and 23) . . . . . . . . . . . . . . . . . . 101,860 90,000 100,049 1,215,229 Payables under repurchase agreements (Note 13) . . . . . . . . . . . . . . — 20,340 — — Payables under securities lending transactions (Notes 13 and 23) . . 163,920 92,523 103,825 1,955,623 trading liabilities (Notes 5, 23 and 24) . . . . . . . . . . . . . . . . . . . . . . . 322,373 229,444 204,905 3,846,018 Borrowed money (Notes 13 and 23) . . . . . . . . . . . . . . . . . . . . . . . . 235,000 284,659 266,200 2,803,627 Foreign exchange (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1 1 18 Bonds payable (Notes 15 and 23) . . . . . . . . . . . . . . . . . . . . . . . . . . 91,195 98,758 91,192 1,087,997 Other liabilities (Notes 16 and 23) . . . . . . . . . . . . . . . . . . . . . . . . . . 154,386 200,604 159,269 1,841,881 Provision for retirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,079 14,765 15,375 167,974 Provision for directors’ retirement benefits . . . . . . . . . . . . . . . . . . . . 215 148 200 2,567 Provision for credit losses on off-balance-sheet instruments . . . . . . 1,766 2,162 1,662 21,070 Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 11 0 50 Acceptances and guarantees (Note 11) . . . . . . . . . . . . . . . . . . . . . . 26,080 22,840 26,231 311,149

total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,431,148 4,989,319 4,618,609 52,865,052

EQUITY: Capital stock (Note 17): Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252,465 252,465 252,465 3,011,996 Preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167,315 167,315 167,315 1,996,131 Capital surplus (Note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,333 33,333 33,333 397,678 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113,797 100,984 102,831 1,357,641 valuation difference on available-for-sale securities . . . . . . . . . . . . . 9,181 5,706 2,887 109,539 Deferred gains or losses on hedges . . . . . . . . . . . . . . . . . . . . . . . . 3,436 3,800 3,276 40,996 Foreign currency translation adjustment . . . . . . . . . . . . . . . . . . . . . (9,441) (8,687) (8,409) (112,636) treasury stock—at cost (Note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . (15,650) (15,650) (15,650) (186,719) total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 554,437 539,268 538,050 6,614,626 Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 691 650 662 8,246

total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 555,129 539,919 538,713 6,622,872

tOtAl . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥4,986,277 ¥5,529,239 ¥5,157,322 $59,487,924

See the accompanying notes to consolidated semiannual financial statements .

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Consolidated Statements of Income (Unaudited)Aozora Bank, ltd . and Consolidated SubsidiariesFor the six-month periods ended September 30, 2010 and 2009, and the year ended March 31, 2010

Thousands of U.S. Dollars Millions of Yen (Note 1)

Sep. 30, 2010 Sep. 30, 2009 Mar. 31, 2010 Sep. 30, 2010 (6 months) (6 months) (1 year) (6 months)

INCOME: interest income: interest on loans and discounts . . . . . . . . . . . . . . . . . . . . . . . . . . ¥29,815 ¥35,845 ¥68,541 $355,707 interest and dividends on securities . . . . . . . . . . . . . . . . . . . . . . . 7,379 7,676 14,355 88,045 interest on due from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 96 156 761 Other interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,638 2,794 6,162 31,478 Fees and commissions income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,776 8,342 14,702 68,921 trading income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,818 10,164 17,134 69,414 Other ordinary income (Note 18) . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,164 11,636 22,991 192,846 Other income (Note 19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,401 1,815 3,161 28,655

total income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,059 78,371 147,206 835,827

EXPENSES: interest expenses: interest on deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,937 13,326 26,502 142,418 interest on debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,578 7,109 11,562 30,768 interest on borrowings and rediscounts . . . . . . . . . . . . . . . . . . . . 326 973 1,407 3,891 Other interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,629 1,849 3,015 19,439 Fees and commissions expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 455 555 970 5,433 trading expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 — 38 100 Other ordinary expenses (Note 20) . . . . . . . . . . . . . . . . . . . . . . . . . 8,621 10,688 22,162 102,860 General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . 20,294 22,267 44,830 242,114 Other expenses (Note 21) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,513 13,593 29,205 113,500

total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,365 70,362 139,696 660,523

INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,693 8,008 7,510 175,304

INCOME TAXES: Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338 438 298 4,043 Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 1,111 (1,107) 1,683

total income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 479 1,549 (808) 5,726

INCOME BEFORE MINORITY INTERESTS . . . . . . . . . . . . . . . . . . . . 14,214 — — 169,578

MINORITY INTERESTS IN INCOME . . . . . . . . . . . . . . . . . . . . . . . . 36 2 15 431

NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥14,177 ¥ 6,456 ¥ 8,303 $169,147

Yen U.S. Dollars (Note 1)

Sep. 30, 2010 Sep. 30, 2009 Mar. 31, 2010 Sep. 30, 2010 (6 months) (6 months) (1 year) (6 months)

PER SHARE INFORMATION: Basic net income per share of common stock (Note 25) . . . . . . . . . ¥9 .48 ¥4 .32 ¥ 4 .10 $0 .11 Diluted net income per share of common stock (Note 25) . . . . . . . . 7 .23 3 .29 3 .95 0 .09 Cash dividends applicable to the period/year: Class A Series 4 preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . — — 10 .00 — Class C Series 5 preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . — — 7 .44 — Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 0 .70 —

See the accompanying notes to consolidated semiannual financial statements .

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Consolidated Statements of Changes in Equity (Unaudited)Aozora Bank, ltd . and Consolidated SubsidiariesFor the six-month periods ended September 30, 2010 and 2009, and the year ended March 31, 2010

Thousands of U.S. Dollars Millions of Yen (Note 1)

Sep. 30, 2010 Sep. 30, 2009 Mar. 31, 2010 Sep. 30, 2010

Common stock: Balance at the beginning of current period . . . . . . . . . . . . . . . . . ¥252,465 ¥252,465 ¥252,465 $3,011,996

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . 252,465 252,465 252,465 3,011,996

Preferred stock: Balance at the beginning of current period . . . . . . . . . . . . . . . . . 167,315 167,315 167,315 1,996,131

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . 167,315 167,315 167,315 1,996,131

Capital surplus: Balance at the beginning of current period . . . . . . . . . . . . . . . . . 33,333 33,333 33,333 397,678

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . 33,333 33,333 33,333 397,678

Retained earnings: Balance at the beginning of current period . . . . . . . . . . . . . . . . . 102,831 96,694 96,694 1,226,816 Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,212) (2,166) (2,166) (38,322) Change of scope of consolidation . . . . . . . . . . . . . . . . . . . . . . . — — (0) — Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,177 6,456 8,303 169,147

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . 113,797 100,984 102,831 1,357,641

valuation difference on available-for-sale securities: Balance at the beginning of current period . . . . . . . . . . . . . . . . . 2,887 (778) (778) 34,454 Net change of items during the period . . . . . . . . . . . . . . . . . . . . 6,293 6,485 3,666 75,085

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . 9,181 5,706 2,887 109,539

Deferred gains or losses on hedges: Balance at the beginning of current period . . . . . . . . . . . . . . . . . 3,276 3,630 3,630 39,086 Net change of items during the period . . . . . . . . . . . . . . . . . . . . 160 170 (354) 1,910

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . 3,436 3,800 3,276 40,996

Foreign currency translation adjustment: Balance at the beginning of current period . . . . . . . . . . . . . . . . . (8,409) (8,050) (8,050) (100,325) Net change of items during the period . . . . . . . . . . . . . . . . . . . . (1,031) (637) (358) (12,311)

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . (9,441) (8,687) (8,409) (112,636)

treasury stock—at cost: Balance at the beginning of current period . . . . . . . . . . . . . . . . . (15,650) (15,650) (15,650) (186,718) Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0) (0) (0) (1)

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . (15,650) (15,650) (15,650) (186,719)

Minority interests: Balance at the beginning of current period . . . . . . . . . . . . . . . . . 662 648 648 7,906 Net change of items during the period . . . . . . . . . . . . . . . . . . . . 28 2 14 340

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . 691 650 662 8,246

total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥555,129 ¥539,919 ¥538,713 $6,622,872

See the accompanying notes to consolidated semiannual financial statements .

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Consolidated Statements of Cash Flows (Unaudited)Aozora Bank, ltd . and Consolidated SubsidiariesFor the six-month periods ended September 30, 2010 and 2009, and the year ended March 31, 2010

Thousands of U.S. Dollars Millions of Yen (Note 1)

Sep. 30, 2010 Sep. 30, 2009 Mar. 31, 2010 Sep. 30, 2010 (6 months) (6 months) (1 year) (6 months)

CASH FLOWS FROM OPERATING ACTIVITIES: income before income taxes and minority interests . . . . . . . . . . . . . . ¥14,693 ¥8,008 ¥7,510 $175,304 Adjustments for: Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,020 2,600 4,316 24,104 impairment loss of long-lived assets . . . . . . . . . . . . . . . . . . . . . . . . 1 1 1 13 loss on adjustment for changes of accounting standard for asset retirement obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 718 — — 8,571 increase (decrease) in allowance for loan losses . . . . . . . . . . . . . . . (13,770) (12,834) (10,742) (164,284) increase (decrease) in allowance for investment losses . . . . . . . . . . 106 853 (4,934) 1,272 increase (decrease) in provision for retirement benefits . . . . . . . . . . (1,295) (2,985) (2,375) (15,455) increase (decrease) in provision for directors’ retirement benefits . . 14 6 58 174 increase (decrease) in provision for credit losses on off-balance-sheet instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 (1) (501) 1,253 interest income (accrual basis) . . . . . . . . . . . . . . . . . . . . . . . . . . . . (39,897) (46,411) (89,216) (475,990) interest expenses (accrual basis) . . . . . . . . . . . . . . . . . . . . . . . . . . 16,472 23,258 42,489 196,517 loss (gain) on securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,432) (6,452) (1,195) (88,670) loss (gain) on money held in trust . . . . . . . . . . . . . . . . . . . . . . . . . (270) (230) (601) (3,222) Foreign exchange losses (gains) . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,605 39,497 30,534 651,462 loss (gain) on disposal of noncurrent assets . . . . . . . . . . . . . . . . . 62 72 91 748 Net decrease (increase) in trading assets . . . . . . . . . . . . . . . . . . . . (89,108) (2,080) 68,897 (1,063,096) Net increase (decrease) in trading liabilities . . . . . . . . . . . . . . . . . . . 117,467 (17,296) (41,835) 1,401,428 Net decrease (increase) in loans and bills discounted . . . . . . . . . . . 211,718 128,336 396,133 2,525,871 Net increase (decrease) in deposits . . . . . . . . . . . . . . . . . . . . . . . . (107,686) 104,517 177,739 (1,284,741) Net increase (decrease) in debentures . . . . . . . . . . . . . . . . . . . . . . (221,743) (570,986) (927,570) (2,645,478) Net increase (decrease) in borrowed money (excluding subordinated borrowings) . . . . . . . . . . . . . . . . . . . . . . (31,200) (128,038) (146,497) (372,226) Net decrease (increase) in due from banks (excluding due from the Bank of Japan) . . . . . . . . . . . . . . . . . . . . 3,163 50,627 46,252 37,747 Net decrease (increase) in call loans and bills bought and others . . (59,162) 52,650 115,210 (705,823) Net decrease (increase) in receivables under securities borrowing transactions . . . . . . . . . . . . . . . . . . . . — 51,143 51,143 — Net increase (decrease) in call money and bills sold, payables under repurchase agreements and others . . . . . . . . . . . . . . . . . . 1,811 (15,246) (25,538) 21,607 Net increase (decrease) in payables under securities lending transactions . . . . . . . . . . . . . . . . . . . . . . 60,095 51,973 63,275 716,955 Net decrease (increase) in foreign exchange—assets . . . . . . . . . . . (14) 625 5,695 (172) increase (decrease) in straight bonds—issuance and redemption . . — (16,275) (22,541) — interest and dividends received (cash basis) . . . . . . . . . . . . . . . . . . 42,873 47,207 89,302 511,500 interest paid (cash basis) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (19,146) (22,943) (40,674) (228,428) Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,591 (767) (3,541) 436,550 Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (28,206) (281,170) (219,114) (336,509) income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (357) (414) (512) (4,268) Net cash used in operating activities . . . . . . . . . . . . . . . . . . . . . (28,563) (281,584) (219,626) (340,777)CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,464,772) (1,665,257) (2,989,015) (17,475,218) Proceeds from sales of securities . . . . . . . . . . . . . . . . . . . . . . . . . . 1,025,603 664,578 1,422,149 12,235,785 Proceeds from redemption of securities . . . . . . . . . . . . . . . . . . . . . 399,973 838,021 1,408,763 4,771,816 increase in money held in trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,265) (5,028) (5,028) (38,953) Decrease in money held in trust . . . . . . . . . . . . . . . . . . . . . . . . . . . 651 4,784 5,785 7,773 Purchase of tangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . (86) (56) (167) (1,031) Purchase of intangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . (484) (380) (741) (5,775) Proceeds from sales of tangible fixed assets . . . . . . . . . . . . . . . . . 0 149 149 8 Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . (42,378) (163,189) (158,107) (505,595)CASH FLOWS FROM FINANCING ACTIVITIES: Redemption of subordinated bonds . . . . . . . . . . . . . . . . . . . . . . . . — (308) (1,300) — Repayment of lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . (296) (2,166) (603) (3,532) Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,212) — (2,166) (38,322) Cash dividends paid to minority of stockholders of consolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7) (0) — (91) Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0) — (0) (1) Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . (3,515) (2,474) (4,070) (41,946)NET DECREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . (74,458) (447,249) (381,804) (888,318)CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD . . . . . . . 187,213 569,017 569,017 2,233,520 CASH AND CASH EQUIVALENTS, END OF PERIOD (Note 4) . . . . . . . ¥112,754 ¥121,768 ¥187,213 $1,345,202

See the accompanying notes to consolidated semiannual financial statements .

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Notes to Consolidated Semiannual Financial Statements (Unaudited)Aozora Bank, ltd . and Consolidated SubsidiariesFor the six-month periods ended September 30, 2010 and 2009

1. Basis of Presenting Consolidated Semiannual Financial Statements the consolidated semiannual financial statements are

stated in Japanese yen, the currency of the country in which

the Bank is incorporated and operates . Japanese yen figures

of less than one million yen are truncated, except for per

share data . As a result, the totals do not necessarily equal the

sum of the individual amounts . the translation of Japanese

yen amounts into u .S . dollar amounts is included solely for

the convenience of readers outside Japan and has been

made at the rate of ¥83 .82 to $1 .00, the rate of exchange at

September 30, 2010 . Such translations should not be con-

strued as representations that the Japanese yen amounts

could be converted into u .S . dollars at that or any other rate .

the amounts for the year ended March 31, 2010 shown in

the consolidated semiannual financial statements were derived

from the audited financial statements for the year then ended .

2. Summary of Significant Accounting Policiesa. Use of Estimates—the preparation of consolidated

semiannual financial statements in conformity with generally

accepted accounting principles requires management to

make estimates and assumptions that affect the reported

amounts of assets and liabilities, disclosures of contingent

assets and liabilities at the date of the consolidated semian-

nual financial statements and the reported amounts of reve-

nues and expenses during the reporting period . Actual results

could differ from those estimates . Material estimates that are

particularly susceptible to significant change in the near term

include, but are not limited to, those that are related to the

determination of the allowance for loan losses, deferred tax

assets, and the valuation of financial instruments .

b. Consolidation—the consolidated semiannual financial

statements include the accounts of the Bank and its signifi-

cant subsidiaries . the number of consolidated subsidiaries

was 17 as of September 30, 2010, 17 as of March 31, 2010

and 19 as of September 30, 2009 .

under the control or influence concept, those entities in

which the Bank, directly or indirectly, is able to exercise con-

trol over finance and operations should be fully consolidated,

and those entities over which the Group has the ability to

exercise significant influence should be accounted for by the

equity method .

Practical issues task Force (‘PitF’) No . 20, ‘Practical

Solution on Application of Control Criteria and influence

Criteria to investment Associations,’ issued by the Accounting

Standards Board of Japan (the ‘ASBJ’), provides additional

guidance on how the control and influence concept should be

practically applied to investment vehicles, such as limited

partnerships, tokumei Kumiai arrangements (a silent partner-

ship under the Commercial Code of Japan) and other entities

with similar characteristics in order to prevent these invest-

ment vehicles from being inappropriately excluded from

consolidation .

the consolidated semiannual financial statements do not

include the accounts of certain subsidiaries such as NCM

investments Corporation, because the combined total assets,

total income, net income (loss) and retained earnings of such

subsidiaries would not have a material effect on the accompa-

nying consolidated semiannual financial statements .

investments in unconsolidated subsidiaries and affiliated

companies such as vietnam international leasing Company

limited are stated at cost . these companies are not

accounted for using the equity method of accounting because

the effect on the accompanying consolidated semiannual

financial statements would not be material even if the equity

method of accounting had been applied to the investments in

these companies .

the accompanying consolidated semiannual financial state-

ments of Aozora Bank, ltd . (the ‘Bank’) and consolidated

subsidiaries (together, the ‘Group’) have been prepared in

accordance with the provisions set forth in the Japanese

Financial instruments and Exchange Act, the Banking Act

of Japan and other related accounting regulations, and in

conformity with accounting principles generally accepted in

Japan, which are different in certain respects as to application

and disclosure requirements of international Financial

Reporting Standards .

in preparing these consolidated semiannual financial

statements, certain reclassifications and rearrangements have

been made to the consolidated semiannual financial state-

ments issued domestically, in order to present them in a form

which is more familiar to readers outside Japan .

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the difference between the cost of an acquisition and the

fair value of the net assets of the acquired subsidiaries at the

date of acquisition is charged to operations when incurred

due to its immateriality . A bargain purchase gain is charged

to operations on the acquisition date after reassessing the

procedures of acquisition price allocation to ensure that an

acquirer has correctly identified all of the assets acquired and

all of the liabilities assumed with a review of such procedures

used, effective April 1, 2010, due to the application of a

revised accounting standard for business combinations,

ASBJ Statement No . 21, ‘Accounting Standard for Business

Combinations .’

All significant inter-company balances and transactions are

eliminated in consolidation . All material unrealized profits

resulting from transactions within the Group are also

eliminated .

the ASBJ issued ASBJ implementation Guidance No . 22,

‘implementation Guidance on Determining a Subsidiary and

an Affiliate for Consolidated Financial Statements,’ on May 13,

2008, which clarifies the conditions where a company does

not regard an entity as a subsidiary even if the controlling

interest of the entity is held by the company . this accounting

regulation was implemented from the fiscal year commencing

on and after October 1, 2008, and was applied by the Group

from the year ended March 31, 2010 . there was no signifi-

cant effect on the consolidated financial statements for the

year ended March 31, 2010 due to this change .

the ASBJ issued ‘Practical Solution on unification of

Accounting Policies Applied to Foreign Subsidiaries for the

Consolidated Financial Statements’ (ASBJ PitF No . 18) on

May 17, 2006 . this PitF permits foreign subsidiaries’ financial

statements prepared in accordance with either international

Financial Reporting Standards or generally accepted account-

ing principles in the united States to be used for the consoli-

dation process with certain limitations . this accounting

regulation was applied by the Group from the year ended

March 31, 2009 .

c. Cash and Cash Equivalents—Cash and cash equivalents

consist of cash on hand and due from the Bank of Japan .

d. Trading Assets/Liabilities—transactions for trading pur-

poses (for the purpose of seeking to capture gains arising

from short-term changes in interest rates, currency exchange

rates or market prices of securities and other market-related

indices or arbitrage opportunities) are included in ‘trading

assets’ or ‘trading liabilities,’ as appropriate, on a trade date

basis . trading assets and liabilities are stated at fair value .

Profits and losses on transactions for trading purposes are

shown as ‘trading income’ and ‘trading expenses,’ as

appropriate, on a trade date basis .

e. Securities—All securities are classified and accounted for,

depending on management’s intent, as follows:

(1) trading securities which are held for the purpose of earning

capital gains in the near term (other than securities booked in

trading accounts) are reported at fair value, and the related

unrealized gains and losses are recognized in the consoli-

dated statements of income, (2) held-to-maturity debt securi-

ties which are expected to be held to maturity with the

positive intent and ability to hold them to maturity are reported

at amortized cost and (3) available-for-sale securities are

reported at fair value, with unrealized gains and losses, net of

applicable taxes, reported in a separate component of equity .

the cost of sale of these securities is determined mainly by

the moving-average method .

Non-marketable available-for-sale securities without readily

determinable fair values were generally stated at cost before

the end of the year ended March 31, 2010 . However, since

the end of the year ended March 31, 2010, the scope of fair

value measurement was expanded and, therefore, the mea-

surement at cost or amortized cost of available-for-sale secu-

rities has not been allowed unless the fair value cannot be

reliably determined due to the revision of ‘Accounting

Standard for Financial instruments’ (ASBJ Statement No . 10,

the latest revision on March 10, 2008) . under the revised

standard, non-marketable equity securities, however, continue

to be regarded as securities whose fair value cannot be reli-

ably determined and generally measured at cost . Certain non-

marketable debt securities, such as privately placed corporate

bonds and certain asset-backed securities, which were previ-

ously measured at cost, have been measured at fair value

since March 31, 2010 . the effect of the initial application of

the revised accounting standard in the consolidated financial

statements for the year ended March 31, 2010 was to

decrease ‘Monetary claims bought’ by ¥5,189 million,

increase ‘Money held in trust’ by ¥851 million, decrease

‘Securities’ by ¥8,456 million, increase ‘Deferred tax assets’

by ¥936 million, decrease ‘Allowance for loan losses’ by

¥5,780 million, decrease ‘Allowance for investment losses’ by

¥6,602 million, decrease ‘valuation difference on available-for-

sale securities’ by ¥1,365 million, and increase ‘income before

income taxes and minority interests’ by ¥1,892 million,

respectively . the cost of sale of non-marketable available-for-

sale securities stated at cost or amortized cost is determined

by the moving-average method .

For other than temporary declines in fair value, the cost of

securities is reduced to fair value and the impairment losses

are recognized by a charge to operations .

the Group records its interests in investment limited part-

nerships, associations under the Civil Code of Japan and

Tokumei Kumiai arrangements, based on its proportionate

share of the net assets in such entities, and recognizes its

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share of profits or losses in a manner similar to the equity

method of accounting . the Group records such interests in

‘Securities .’

Securities included in money held in trust on behalf of the

Group are accounted for in the same manner as the securities

mentioned above .

f. Derivatives and Hedging Activities—Derivative financial

instruments (other than derivatives booked in trading

accounts) are classified and accounted for as follows:

(1) All derivatives other than those used for hedging purposes

are recognized as either assets or liabilities and measured

at fair value, with gains or losses recognized in the

consolidated statement of income in the current period .

(2) Derivatives used for hedging purposes, if they meet certain

criteria for applying hedge accounting, including high cor-

relation of fair value movement between the hedging

instruments and the hedged items and the assessment of

its effectiveness, are recognized as either assets or liabili-

ties and measured at fair value . valuation gains or losses

on derivatives used for hedging purposes are primarily

deferred over the terms of the hedged items as a compo-

nent of equity and are charged to operations when gains

and losses on the hedged items are recognized .

Hedges of Interest Rate Risk

the Bank applies deferral hedge accounting to hedges of

interest rate risk associated with financial assets and liabilities

in accordance with the industry Audit Committee Report No .

24, ‘Accounting and Auditing treatments on the Application of

Accounting Standards for Financial instruments in the

Banking industry,’ issued by the Japanese institute of Certified

Public Accountants (‘JiCPA’) (the ‘JiCPA industry Audit

Committee Report No . 24’) .

under the JiCPA industry Audit Committee Report No . 24,

hedges to offset changes in fair value of fixed rate instruments

(such as loans or deposits) (‘fair value hedges’) are applied by

grouping hedging instruments and hedged items by their

maturities . the assessment of hedge effectiveness is generally

based on the consideration of interest rate indices affecting

the respective fair values of the group of hedging instruments

and hedged items .

Hedges of Foreign Currency Risk

the Bank applies deferral hedge accounting to hedges of

foreign currency risk associated with foreign currency-

denominated financial assets and liabilities in accordance with

the industry Audit Committee Report No . 25, ‘Accounting and

Auditing treatments for Foreign Currency transactions in the

Banking industry’ issued by the JiCPA (the ‘JiCPA industry

Audit Committee Report No . 25’) .

in accordance with the JiCPA industry Audit Committee

Report No . 25, the Bank designates certain currency swaps

and foreign exchange swaps for the purpose of funding

foreign currencies as hedges for the exposure to changes in

foreign exchange rates associated with foreign currency-

denominated assets or liabilities when the foreign currency

positions on the hedged assets or liabilities are expected to

exceed the corresponding foreign currency positions on the

hedging instruments . Hedge effectiveness is reviewed by

comparing the total currency position of the hedged items

with that of the hedging instruments by currency .

For hedging the foreign currency exposure of foreign

currency-denominated available-for-sale securities (other than

debt securities), which were designated in advance, fair value

hedge accounting is adopted on a portfolio basis when the

cost of the hedged securities is covered with offsetting liabili-

ties denominated in the same foreign currency as the hedged

securities .

Inter- and Intra-company Derivative Transactions

For inter- and intra-company derivative transactions for hedg-

ing purposes (‘internal derivatives’), including currency and

interest rate swaps, the Bank currently charges gains and

losses on internal derivatives to operations or defers them as

a component of equity without elimination in accordance with

the JiCPA industry Audit Committee Reports No . 24 and No .

25 which permit a bank to retain the gains and losses on

internal derivatives in its financial statements without elimina-

tion if the bank establishes and follows strict hedging criteria

by entering into mirror-image offsetting transactions with

external third parties within three business days after the des-

ignation of internal derivatives as hedging instruments .

g. Tangible Fixed Assets and Intangible Fixed Assets—

tangible fixed assets and intangible fixed assets are stated at

cost .

Depreciation of tangible fixed assets of the Group is com-

puted primarily by the declining-balance method at rates

based on the estimated useful lives of the assets, while the

straight-line method is applied to buildings of the Bank . the

ranges of useful lives are principally from 15 to 50 years for

buildings and from 5 to 15 years for other tangible fixed

assets .

Depreciation of intangible fixed assets of the Group is com-

puted by the straight-line method over the estimated useful

life of the assets . Cost of software developed or obtained for

internal use is depreciated over the estimated useful life of the

software (principally 5 years) .

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lease assets under finance lease transactions, in which

substantial ownership is not deemed to be transferred, are

depreciated by the straight-line method over the lease term .

the salvage value is zero or the guaranteed amounts if speci-

fied in the lease contracts .

h. Long-lived Assets—the Group reviews its long-lived

assets for impairment whenever events or changes in circum-

stances indicate that the carrying amount of an asset or asset

group may not be recoverable . An impairment loss would be

recognized if the carrying amount of an asset or asset group

exceeds the sum of the undiscounted future cash flows

expected to result from the continued use and eventual dis-

position of the asset or asset group . the impairment loss

would be measured as the amount by which the carrying

amount of the asset exceeds its recoverable amount, which is

the higher of the discounted cash flows from the continued

use and eventual disposition of the asset or asset group or

the net selling price at disposition .

i. Deferred Charges—Debenture issuance expenses are

deferred and amortized by the straight-line method over the

terms of the debentures .

Corporate bond issuance expenses are deferred and

amortized by the straight-line method over the terms of the

corporate bonds .

j. Write-off of Loans and Allowance for Loan Losses—

loans to borrowers who are assessed as ‘legally bankrupt’

(in the process of legal proceedings for bankruptcy, special

liquidation, etc .) or ‘De facto bankrupt’ (in serious financial dif-

ficulties and are not deemed to be capable of restructuring)

under the Bank’s self-assessment guidelines are written off to

the amounts expected to be collected through the disposal of

collateral or execution of guarantees, etc . the written-off

amounts deemed to be uncollectible were ¥65,797 million

($784,979 thousand) and ¥57,846 million at September 30,

2010 and 2009, respectively .

For loans to borrowers who are assessed as ‘in danger of

bankruptcy’ (not yet bankrupt but are in financial difficulty and

are highly likely to go bankrupt in the foreseeable future), a

specific allowance is provided for the loan losses at an

amount considered to be necessary based on an overall sol-

vency assessment of the borrowers and expected collectible

amounts through the disposal of collateral or execution of

guarantees, etc . For loans whose future cash flows of princi-

pal and interest are reasonably estimated, the difference

between the discounted cash flows and the carrying value is

accounted for as allowance for loan losses (the ‘DCF method’) .

For other loans, the Bank provides a general allowance by

applying the estimated loan-loss ratio determined based on

the historical loan-loss data over a defined period in the past .

However, for borrowers with a large credit exposure catego-

rized as ‘Need attention’ under the internal credit rating sys-

tem, the loan loss amount estimated by the DCF method is

reflected as an addition to the allowance for loan losses cal-

culated based on the estimated loan loss ratio, if necessary .

An allowance for loans to restructuring countries shall be

provided for the amount of expected losses based on an

assessment of political and economic conditions in their

respective countries .

All loans are monitored in line with the internal rating rule

and the internal self-assessment standard on an ongoing

basis . Operating divisions or branches review internal credit

ratings of borrowers which are defined in line with ‘Borrower

categories’ and those ratings are then approved by the divi-

sions in charge of credit . the division in charge of asset

assessment, which is independent of operating divisions or

branches and the divisions in charge of credit, reviews the

appropriateness of internal credit ratings on a sample basis .

Based upon the Borrower categories determined by the

aforementioned process as of the balance sheet date, operat-

ing divisions and branches initially compute the amounts of

write-offs and allowance, and the division in charge of asset

assessment verifies the amounts and determine the final

amounts .

with regard to the allowance for loan losses of consolidated

subsidiaries, the general allowance is calculated for the

amount of estimated loan losses based on historical loan-loss

data over a defined period in the past . For loans to ‘in danger

of bankruptcy’ borrowers and ‘De facto bankrupt’ and ‘legally

bankrupt’ borrowers, a specific allowance is provided or the

uncollectible amount is written off based on an assessment of

collectability of individual loans .

k. Allowance for Investment Losses—An allowance for

investment losses is provided for the estimated losses on cer-

tain investments based on an assessment of the issuers’

financial condition and uncertainty about future recoverability

of the decline in realizable values of the investments .

l. Provision for Retirement Benefits—the Group accounts

for the provision for retirement benefits on an accrual basis for

the six-month periods based on the estimation of the fiscal-

year-end projected benefit obligations and plan assets . Prior

service cost is amortized using the straight-line method over

the employees’ average remaining service period at incur-

rence . Net actuarial gain and loss is amortized using the

straight-line method over a period within the employees’

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average remaining service period commencing from the next

fiscal year after incurrence .

the ASBJ issued ‘Partial Amendments to Accounting

Standard for Retirement Benefits (Part 3)’ (ASBJ Statement

No . 19, July 31, 2008) . the partial amendments to the

standard ceased allowing use of the 5-year average of the

high-quality bond yield for the discount rates and prescribed

that the discount rate should be determined referring to

the high-quality bond yield at the fiscal year end . the Bank

applied these partial amendments from the year ended March

31, 2010 . there was no effect on the consolidated financial

statements for the year ended March 31, 2010 from applying

the amendment because the discount rate the Bank applied

for the calculation of the projected benefit obligations as of

March 31, 2010 was unchanged from the rate applied in the

previous year .

m. Provision for Directors’ Retirement Benefits—the

provision for directors’ retirement benefits is provided at the

amount that would be required if all directors and corporate

auditors retired at the balance sheet date .

n. Provision for Credit Losses on Off-balance-sheet

Instruments—Provision for credit losses on off-balance-

sheet instruments is provided for credit losses on commit-

ments to extend loans and other off-balance-sheet financial

instruments based on an estimated loss ratio or individually

estimated loss amount determined by the same methodology

used in determining the amount of allowance for loan losses .

o. Lease Transactions—All finance lease transactions are

capitalized to recognize lease assets and lease obligations on

the balance sheet . However, the accounting standard permits

legacy leases which existed at the transition date and do not

transfer ownership of the leased property to the lessee to

be accounted for as operating lease transactions if certain

“as if capitalized” information is disclosed in the notes to the

lessee’s financial statements .

the Group applied the revised accounting standard effec-

tive April 1, 2008 . the Bank and domestic consolidated sub-

sidiaries accounted for leases which existed at the transition

date and did not transfer ownership of the leased property to

the lessee as operating lease transactions .

All other leases are accounted for as operating leases .

p. Income Taxes—Deferred income taxes are recorded to

reflect expected future consequences of temporary differ-

ences between assets and liabilities recognized for financial

reporting purposes and such amounts recognized for tax pur-

poses . these deferred taxes are measured by applying

currently enacted tax rates to the temporary differences . the

Bank assesses the realizability of deferred tax assets based

on consideration of the available evidence, including future

taxable income, future reversal of existing temporary differ-

ences and tax planning strategies . the Bank reduces the car-

rying amount of a deferred tax asset to the extent that it is not

probable that sufficient taxable income will be available to

allow the benefit of part or all of that deferred tax asset to be

realized . Such reduction may be reversed to the extent that it

becomes probable that sufficient taxable income will be

available and warrant the realization of tax benefits .

q. Foreign Currency Items—Assets and liabilities denomi-

nated in foreign currencies held by the Bank are translated

into Japanese yen at the exchange rates prevailing at the bal-

ance sheet date except for investments in equity securities of

unconsolidated subsidiaries or affiliated companies, which are

translated at historical rates .

Assets and liabilities denominated in foreign currencies

which are held by consolidated subsidiaries are translated into

Japanese yen at the exchange rates as of the consolidated

balance sheet date, while equity accounts are translated at

historical rates . Differences arising from such translations are

shown as ‘Foreign currency translation adjustment’ or

‘Minority interests’ as a separate component of equity .

Revenue and expense accounts of consolidated foreign

subsidiaries are translated into Japanese yen at the average

exchange rate . Differences arising from such translation are

included in ‘Foreign currency translation adjustment’ or

‘Minority interests’ in a separate component of equity in the

balance sheets .

r. Per Share Information—Basic net income per share is

computed by dividing net income attributable to common

stockholders by the weighted-average number of shares of

common stock outstanding for the period, retroactively

adjusted for stock splits or reverse stock splits .

Diluted net income per share reflects the potential dilution

that would occur if dilutive options and warrants were exer-

cised or the securities were converted into common stock,

also retroactively adjusted for stock splits or reverse stock

splits . Diluted net income per share of common stock

assumes full conversion of the preferred stock at the begin-

ning of the year (or at the time of issuance) with an applicable

adjustment for related dividends to preferred stock unless the

preferred stock has an anti-dilutive effect .

Cash dividends per share presented in the accompanying

consolidated statements of income are dividends applicable

to the respective years and include dividends to be paid after

the end of the years .

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s. New Accounting Pronouncements

Presentation of Comprehensive Income—On June 30,

2010, the ASBJ issued ASBJ Statement No . 25, ‘Accounting

Standard for Presentation of Comprehensive income’ and

revised ASBJ Statement No . 22 ‘Accounting Standard for

Consolidated Financial Statements’ to prescribe the presenta-

tion of comprehensive income and other comprehensive

income .

under the new accounting standards, comprehensive

income should be disclosed in a single format with net income

or loss, or in a separate format for comprehensive income

statement that results in two separate statements, current/

existing statement of income and a statement of other

comprehensive income .

when amounts previously presented in other comprehen-

sive income are reclassified to profit or loss, such reclassifica-

tions are presented in the note to the financial statements .

this standard is effective for the annual consolidated finan-

cial statements for the year ending on or after March 31, 2011

with early adoption permitted on the annual consolidated

financial statements for the year ending on or after September

30, 2010 .

Accounting Changes and Error Corrections—in

December 2009, ASBJ issued ASBJ Statement No . 24,

‘Accounting Standard for Accounting Changes and Error

Corrections’ and ASBJ Guidance No . 24, ‘Guidance on

Accounting Standard for Accounting Changes and Error

Corrections .’ Accounting treatments under this standard and

guidance are as follows:

(1) Changes in Accounting Policies

when a new accounting policy is applied with revision of

accounting standards, a new policy is applied retrospec-

tively unless the revised accounting standards include

specific transitional provisions . when the revised account-

ing standards include specific transitional provisions, an

entity shall comply with the specific transitional provisions .

(2) Changes in Presentation

when the presentation of financial statements is changed,

prior period financial statements are reclassified in

accordance with the new presentation .

(3) Changes in Accounting Estimates

A change in an accounting estimate is accounted for in

the period of the change if the change affects that period

only, and is accounted for prospectively if the change

affects both the period of the change and future periods .

(4) Corrections of Prior Period Errors

when an error in prior period financial statements is

discovered, those statements are restated to reflect the

correction of such errors .

this accounting standard and the guidance are applicable

to accounting changes and corrections of prior period errors

which are made from the beginning of the fiscal year that

begins on or after April 1, 2011 .

3. Accounting ChangeAsset Retirement Obligations—in March 2008, the ASBJ

issued a new accounting standard for asset retirement obliga-

tions, ASBJ Statement No . 18, ‘Accounting Standard for

Asset Retirement Obligations’ and ASBJ Guidance No . 21,

‘Guidance on Accounting Standard for Asset Retirement

Obligations .’

under this accounting standard, an asset retirement obliga-

tion is defined as a legal obligation imposed either by law or

contract that results from the acquisition, construction, devel-

opment and the normal operation of a tangible fixed asset

and is associated with the retirement of such tangible fixed

asset . the asset retirement obligation is recognized as the

sum of the discounted cash flows required for the future asset

retirement and is recorded in the period in which the obliga-

tion is incurred if a reasonable estimate can be made . upon

initial recognition of a liability for an asset retirement obligation,

an asset retirement cost is capitalized by increasing the carry-

ing amount of the related fixed asset by the amount of the lia-

bility . the asset retirement cost is subsequently allocated to

expense through depreciation over the remaining useful life of

the asset . Over time, the liability is accreted to its present

value in each period . Any subsequent revisions to the timing

or the amount of the original estimate of undiscounted cash

flows are reflected as an increase or a decrease in the carry-

ing amount of the liability and the capitalized amount of the

related asset retirement cost . the Group adopted the

standard and guidance effective April 1, 2010 .

As a result, income before income taxes and minority inter-

ests decreased by ¥758 million ($9,054 thousand) and the

amount of initial recognition of a liability for an asset retirement

obligation was ¥1,509 million ($18,003 thousand) .

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4. Cash and Cash EquivalentsCash and cash equivalents as of September 30, 2010 and 2009, consisted of the following:

Thousands of Millions of Yen U.S. Dollars

2010 2009 2010

Cash on hand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 13,915 ¥ 16,781 $ 166,022

Due from the Bank of Japan . . . . . . . . . . . . . . . . . . . . . . . . . 98,838 104,987 1,179,180

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥112,754 ¥121,768 $1,345,202

6. SecuritiesCertain amounts shown in the following tables include trading securities classified as ‘trading assets’ and certain beneficiary in-

terests in trust classified as ‘Monetary claims bought,’ in addition to ‘Securities’ stated in the consolidated balance sheets .

“Securities” stated in the consolidated balance sheets as of September 30, 2010 and 2009, consisted of the following:

Thousands of Millions of Yen U.S. Dollars

2010 2009 2010

Japanese national government bonds . . . . . . . . . . . . . . . . ¥ 736,062 ¥ 813,104 $ 8,781,465

Japanese local government bonds . . . . . . . . . . . . . . . . . . 3,703 6,129 44,182

Japanese corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . 63,146 45,062 753,353

Japanese stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,209 28,925 324,621

Foreign bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289,245 285,363 3,450,794

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193,467 120,869 2,308,131

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥1,312,834 ¥1,299,454 $15,662,546

5. Trading Assets and Liabilitiestrading assets and liabilities as of September 30, 2010 and 2009, consisted of the following:

Thousands of Millions of Yen U.S. Dollars

2010 2009 2010

trading assets:

trading account securities . . . . . . . . . . . . . . . . . . . . . . . ¥ 1,726 ¥ 2,386 $ 20,597

Derivatives of securities related to trading transactions . . 104 1 1,249

trading-related financial derivatives . . . . . . . . . . . . . . . . 386,627 371,740 4,612,589

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥388,458 ¥374,128 $4,634,435

trading liabilities:

Derivatives of securities related to trading transactions . . ¥ 23 ¥ 5 $ 284

trading-related financial derivatives . . . . . . . . . . . . . . . . 322,349 229,438 3,845,734

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥322,373 ¥229,444 $3,846,018

the held-to-maturity bonds as of September 30, 2010, were as follows:

Millions of Yen

Carrying amount Fair value Difference

Fair value exceeding carrying value Bonds:

Japanese national government bonds . . . . . . . ¥29 ¥30 ¥0

As of September 30, 2010 and 2009, securities included equity investments in unconsolidated subsidiaries and affiliated

companies that amounted to ¥5,613 million ($66,975 thousand) and ¥7,406 million, respectively .

As of September 30, 2010 and 2009, the Group extended guarantees of ¥12,007 million ($143,250 thousand) and ¥7,344

million, respectively, to certain privately placed Japanese corporate bonds .

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the costs and aggregate fair values of available-for-sale securities with fair value as of September 30, 2010, were as follows:

Millions of Yen

Unrealized Gains Fair Value Cost (Losses)

Fair value exceeding cost:

Japanese stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 103 ¥ 67 ¥ 35

Japanese national government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 465,807 456,537 9,270

Japanese local government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,696 3,587 109

Japanese corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,061 30,624 437

Foreign bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248,031 242,753 5,277

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,324 52,452 2,871

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 804,024 786,021 18,002

Fair value not exceeding cost:

Japanese stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 969 1,113 (143)

Japanese national government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270,224 270,241 (16)

Japanese local government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 6 (0)

Japanese corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,084 32,379 (294)

Foreign bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,214 41,841 (626)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79,891 82,304 (2,413)

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 424,391 427,886 (3,494)

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥1,228,415 ¥1,213,908 ¥14,507

Thousands of U.S. Dollars

Unrealized Gains Fair Value Cost (Losses)

Fair value exceeding cost:

Japanese stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,235 $ 807 $ 428

Japanese national government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,557,236 5,446,638 110,598

Japanese local government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,102 42,795 1,307

Japanese corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 370,574 365,357 5,217

Foreign bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,959,091 2,896,126 62,965

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 660,034 625,774 34,260

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,592,272 9,377,497 214,775

Fair value not exceeding cost:

Japanese stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,564 13,281 (1,717)

Japanese national government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,223,871 3,224,070 (199)

Japanese local government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 81 (2)

Japanese corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 382,780 386,294 (3,514)

Foreign bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 491,703 499,177 (7,474)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 953,134 981,922 (28,788)

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,063,131 5,104,825 (41,694)

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $14,655,403 $14,482,322 $173,081

Thousands of U.S. Dollars

Carrying amount Fair value Difference

Fair value exceeding carrying value Bonds:

Japanese national government bonds . . . . . . . $358 $364 $6

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the costs and aggregate fair values of securities as of September 30, 2009, were as follows:

Millions of Yen

Unrealized Unrealized Fair Cost Gains Losses Value

Available-for-sale:

Japanese national government bonds . . . . . . . . . . . . . . . . . ¥ 806,643 ¥ 6,440 ¥ 9 ¥ 813,074

Japanese local government bonds . . . . . . . . . . . . . . . . . . . 5,674 123 2 5,795

Japanese corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . 6,494 97 40 6,550

Japanese stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,279 187 218 1,248

Foreign bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220,092 1,401 1,270 220,223

Other * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,713 3,359 446 29,626

Held-to-maturity:

Japanese national government bonds . . . . . . . . . . . . . . . . . 29 0 0 30

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥1,066,927 ¥11,611 ¥1,988 ¥1,076,550

* ‘Other’ includes securities with determinable fair values held by partnerships in which the Group invests, for the amount attributable to the Group’s interest .

the Group has adopted its impairment criteria based on the

severity of decline of securities by ‘Borrower category’ of the

issuer of securities for the determination of significant decline .

Significant decline is regarded as an other-than- temporary

decline unless the significant decline is reasonably recover-

able . impairment losses are recognized for an other-than-

temporary decline .

if fair value declines more than 50% from the acquisition

cost or amortized cost, the Group generally deems the

decline to be significant and other than temporary . However,

based on the ‘Borrower category’ of the issuer of securities,

the following impairment criteria determine whether or not the

fair value decline is significant under the internal standards for

write-offs and reserves .

‘in danger of bankruptcy’, ‘De fact bankrupt’ ‘legally

bankrupt’ … if fair value declines from cost .

‘Need attention’ … if fair value declines more than 30%

from cost .

‘Normal’ … if fair value declines more than 50% from cost .

For debt securities categorized as ‘Normal,’ the fair value

decline is deemed significant if fair value declines more than

30% from cost .

For securities, other than debt securities, whose fair value

remains below a certain level, the fair value decline is deemed

significant even if it does not meet the above criteria .

‘legally bankrupt’ borrower means an issuer of securities

under legal proceedings such as bankruptcy or liquidation .

‘De fact bankrupt’ borrower means an issuer of securities in

similar condition as ‘legally bankrupt .’ ‘in danger of bank-

ruptcy’ borrower means an issuer of securities that is not

currently bankrupt but is highly likely to become bankrupt .

‘Need attention’ borrower means an issuer of securities that

needs to be monitored carefully . ‘Normal’ borrower means an

issuer of securities categorized other than ‘legally bankrupt,’

‘De fact bankrupt,’ ‘in danger of bankruptcy’ or ‘Need

attention .’

For the six-month periods ended September 30, 2010 and

2009, the Group wrote off marketable available-for-sale secu-

rities in the amount of ¥4,228 million ($50,451 thousand) and

¥264 million, respectively as other-than-temporary decline .

the breakdown of the write-off for the six-month period

ended September 30, 2010, was as follows: ¥4,060 million

($48,446 thousand) for monetary claims bought and ¥168

million ($2,005 thousand) for foreign bonds .

in addition, for the six-month periods ended September 30,

2010 and 2009, valuation losses on the marketable available-

for-sale securities which are planned to be sold off were

charged to losses in the amount of ¥51 million ($617

thousand) and ¥106 million, respectively .

For the six-month period ended September 30, 2009,

floating-rate Japanese national government bonds (‘Floating

Rate JGBs’) were stated at the amount reasonably estimated

on the basis of internal calculations in consideration of

PitF No . 25, ‘Practical Solution on Measurement of Fair

value for Financial Assets’ issued by the ASBJ . As a result,

in comparison to the valuation based on market price,

‘Securities’ increased by ¥8,195 million, ‘Deferred tax assets’

decreased by ¥3,334 million and ‘valuation difference on

available-for-sale securities’ increased by ¥4,860 million as

of September 30, 2009 . the value reasonably estimated

for Floating Rate JGBs was calculated by discounting the

estimated future cash flow at the rate derived from yields of

Japanese national government bonds . the yields of Japanese

national government bonds and related volatility are major

variables in pricing . the information as of September 30,

2010 was disclosed in Note 23 .

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the carrying amount of securities whose fair values were not readily determinable as of September 30, 2009, were as follows . Similar information for the six-month period ended September 30, 2010, is disclosed in Note 23 .

Millions of Yen

investments in unconsolidated subsidiaries and affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 7,406Available-for-sale: Japanese unlisted bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,844 Japanese unlisted stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,465 Beneficial interests in trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,476 investment in partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79,657 Foreign securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,673 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥265,534

For the six-month period ended September 30, 2009, the Group transferred securities of ¥41,383 million from ‘trading’ to the ‘available-for-sale’ category . As a result, ordinary income and income before income taxes and minority interests decreased by ¥2,940 million . Securities received under unsecured lending agreements or with cash collateral, or repurchase agreements, and securities received as collateral for derivative transactions,

which permit borrowers to sell or repledge such securities received, amounted to ¥20,019 million ($238,837 thousand) and ¥32,895 million as of September 30, 2010 and 2009, respectively . there were no loaned securities under such agreements as of September, 2010 and 2009 . there were no repledged securities under such agreements as of September 30, 2010 and 2009 .

8. Loans and Bills Discountedloans and bills discounted as of September 30, 2010 and 2009 consisted of the following:

Thousands of Millions of Yen U.S. Dollars

2010 2009 2010

Bills discounted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 562 ¥ 927 $ 6,714

loans on notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,294 113,990 1,077,243

loans on deeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,622,054 3,109,784 31,281,971

Overdrafts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118,902 109,383 1,418,540

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥2,831,814 ¥3,334,086 $33,784,468

7. Money Held in Trustthe cost and carrying amounts for other money held in trust (except for investment purposes and held-to-maturity purposes) as of

September 30, 2010 and 2009 were as follows:

Thousands of Millions of Yen U.S. Dollars

2010 2009 2010

Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥1,638 ¥1,477 $19,549

Carrying amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,576 1,477 30,739

unrealized gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 937 — 11,190

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the following risk-monitored loans were included in loans and bills discounted as of September 30, 2010 and 2009:

Thousands of Millions of Yen U.S. Dollars

2010 2009 2010

loans to bankrupt borrowers . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 15,615 ¥ 46,154 $ 186,304

Past due loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89,495 72,527 1,067,706

loans overdue for three months or more . . . . . . . . . . . . . . . . — — —

Restructured loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,023 17,117 513,281

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥148,134 ¥135,799 $1,767,291

the above amounts are stated after write-offs of uncol-lectible amounts but before deduction of the allowance for loan losses . ‘loans to bankrupt borrowers’ are loans to borrowers who are legally bankrupt and are placed on non-accrual status . ‘Past due loans’ are non-accrual loans on which accrued interest income is not recognized, excluding loans to bankrupt borrowers and loans on which interest payments are deferred in order to support the borrowers’ recovery from financial difficulties . ‘Past due loans’ include loans to borrowers who are assessed as ‘in danger of bankruptcy’ and ‘De facto bankrupt’ under the self-assessment guidelines . ‘loans overdue for three months or more’ are accruing loans for which principal or interest remains unpaid for at least three months, excluding loans to bankrupt borrowers and past due loans . there was no outstanding balance of ‘loans overdue for three months or more’ as of September 30, 2010 and 2009 . ‘Restructured loans’ are loans where lending conditions are relaxed, such as by reducing the interest rate, or by forbearing interest payments or principal repayments to support the borrowers’ recovery, excluding loans to bankrupt borrowers, past due loans and loans overdue for three months or more .

Overdraft contracts and contracts for loan commitments are those by which the Bank is bound to extend loans up to a prearranged amount, upon the request of customers, unless the customer is in breach of contract conditions . the unutilized balance of these contracts amounted to ¥336,275 million ($4,011,875 thousand) and ¥326,539 million as of September 30, 2010 and 2009, respectively . ¥279,336 million ($3,332,580 thousand) and ¥241,291 million of these amounts relate to contracts with original contractual terms of one year or less as of September 30, 2010 and 2009, respectively . Bills discounted are accounted for as financing transac-tions in accordance with the JiCPA industry Audit Committee Report No . 24, although the Bank has the right to sell or pledge them without restriction . the face values of such bills discounted held as of September 30, 2010 and 2009 were ¥562 million ($6,713 thousand) and ¥927 million, respectively . the outstanding amount which was accounted for as sales of loans to participants for loan participations in accor-dance with the JiCPA Accounting Standard Committee Report No . 3, issued on June 1, 1995, was ¥67,090 million ($800,415 thousand) and ¥67,179 million as of September 30, 2010 and 2009, respectively .

9. Foreign ExchangeForeign exchange as of September 30, 2010 and 2009, consisted of the following:

Thousands of Millions of Yen U.S. Dollars

2010 2009 2010

Assets:

Due from foreign banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥13,462 ¥18,517 $160,612

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥13,462 ¥18,517 $160,612

liabilities:

Due to foreign banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 1 ¥ 1 $ 18

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 1 ¥ 1 $ 18

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intangible fixed assets as of September 30, 2010 and 2009, consisted of the following:

Thousands of Millions of Yen U.S. Dollars

2010 2009 2010

Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥6,708 ¥8,263 $80,037

lease assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 17 162

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 82 948

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥6,801 ¥8,362 $81,147

11. Customers’ Liabilities for Acceptances and GuaranteesAll contingent liabilities arising from acceptances and guarantees are included in acceptances and guarantees . As a contra account, customers’ liabilities for acceptances and guarantees are shown as assets representing the Bank’s right of indemnity from customers .

12. Allowance for Loan Losses Allowance for loan losses as of September 30, 2010 and 2009, consisted of the following:

Thousands of Millions of Yen U.S. Dollars

2010 2009 2010

General allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 68,005 ¥ 86,184 $ 811,333Specific allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,769 30,616 438,666total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥104,774 ¥116,800 $1,249,999

10. Tangible Fixed Assets and Intangible Fixed Assetstangible fixed assets as of September 30, 2010, and 2009, consisted of the following:

Thousands of Millions of Yen U.S. Dollars

2010 2009 2010

Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥11,060 ¥ 9,249 $131,958

land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,249 10,793 110,344

lease assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,996 2,284 23,813

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,182 1,699 14,106

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥23,488 ¥24,026 $280,221

Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥21,974 ¥20,321 $262,158

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13. Pledged Assets and Collateralthe carrying amounts of assets pledged as collateral and the collateralized debt as of September 30, 2010 and 2009, were as follows:

Thousands of Millions of Yen U.S. Dollars

2010 2009 2010

Assets pledged as collateral: Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥407,773 ¥188,878 $4,864,868 loans and bills discounted . . . . . . . . . . . . . . . . . . . . . . . . . 222,541 406,624 2,654,992 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 47,421 —

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥630,314 ¥642,924 $7,519,860

Collateralized debts: Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — ¥ 8,000 — Call money and bills sold . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 80,000 80,000 $ 954,426 Payables under repurchase agreements . . . . . . . . . . . . . . . — 20,340 — Payables under securities lending transactions . . . . . . . . . . 163,920 92,523 1,955,622 Borrowed money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203,900 215,059 2,432,594

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥447,820 ¥415,923 $5,342,642

14. DepositsDeposits as of September 30, 2010 and 2009, consisted of the following:

Thousands of Millions of Yen U.S. Dollars

2010 2009 2010

Current deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 21,946 ¥ 54,681 $ 261,827Ordinary deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330,131 309,200 3,938,577Deposits at notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,627 4,939 43,277time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,477,981 2,482,722 29,563,125Negotiable certificates of deposit . . . . . . . . . . . . . . . . . . . . . . 124,310 131,600 1,483,059Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,889 31,208 261,152

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥2,979,886 ¥3,014,352 $35,551,017

in addition, the following assets were pledged or deposited as margin money for future trading and collateral for transactions,

including exchange settlements and derivatives as of September 30, 2010 and 2009:

Thousands of Millions of Yen U.S. Dollars

2010 2009 2010

Due from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 22 ¥ 1,630 $ 262 Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111,353 95,835 1,328,482 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 9,017 —

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥111,375 ¥106,482 $1,328,744

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16. Other Assets and LiabilitiesOther assets and liabilities as of September 30, 2010 and 2009, consisted of the following:

Thousands of Millions of Yen U.S. Dollars

2010 2009 2010

Other assets: Accrued income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 6,638 ¥ 8,957 $ 79,203 Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,111 7,555 84,843 Derivatives other than for trading—assets . . . . . . . . . . . . . . . . . . . . . 58,844 67,190 702,032 Financial stabilization fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,628 32,628 389,263 Deferred debenture issuance expenses . . . . . . . . . . . . . . . . . . . . . . . 78 164 931 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,054 69,617 84,159

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥112,354 ¥186,113 $1,340,431

Other liabilities: Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 24,380 ¥ 26,624 $ 290,871 Derivatives other than for trading—liabilities . . . . . . . . . . . . . . . . . . . . 53,135 57,445 633,920 Matured debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,347 10,730 111,516 lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,252 1,841 14,939 Asset retirement obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,523 — 18,180 Deposits accepted for derivative transactions . . . . . . . . . . . . . . . . . . 39,371 57,064 469,714 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,375 46,897 302,741

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥154,386 ¥200,604 $1,841,881

Debentures as of September 30, 2010 and 2009, consisted of the following:

Thousands of Millions of Yen U.S. Dollars

2010 2009 2010

One-year discount debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 15,484 ¥ 17,489 $ 184,731two-year coupon debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,800 325,200 999,761three-year coupon debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,400 340,500 1,042,711

Five-year coupon debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153,694 235,517 1,833,629

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥340,378 ¥918,707 $4,060,832

Bonds payable outstanding as of September 30, 2010, were issued by the Bank, and those outstanding as of September 30, 2009, were issued by the Bank and Acorn One, one of the subsidiaries of the Bank . Bonds payable as of September 30, 2010 and 2009, were as follows:

Thousands of Millions of Yen U.S. Dollars

2010 2009 2010

unsecured straight bond issued by the Bank . . . . . . . . . . . . . . . . . . . . . . . . . . ¥91,195 ¥91,188 $1,087,997unsecured senior bond issued by Acorn One . . . . . . . . . . . . . . . . . . . . . . . . . . — 6,270 —unsecured junior bond (Subordinated) issued by Acorn One . . . . . . . . . . . . . . — 1,300 —

¥91,195 ¥98,758 $1,087,997

15. Debentures and Bonds Payablethe Bank converted its long-term credit bank charter to an ordinary commercial bank charter on April 1, 2006 . the Financial Services Agency of Japan, however, allows the Bank to retain the ability to issue debentures without registration, which was one of the benefits the Bank enjoyed as a long-term credit bank, for a period of ten years following the conversion to an ordinary commercial bank .

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Thousands

Issued number of shares Treasury stock

Common Stock

Preferred Stock Class A Series 4

Preferred Stock Class C Series 5

Common Stock

Six-month period ended September 30, 2010

Beginning of period . . . . . . . . . . . . . . . . . . . . . 1,650,147 24,072 258,799 155,891

increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 1

End of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,650,147 24,072 258,799 155,892

Six-month period ended September 30, 2009

Beginning of period . . . . . . . . . . . . . . . . . . . . . 1,650,147 24,072 258,799 155,888

increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 1

End of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,650,147 24,072 258,799 155,890

Changes in the number of shares of common stock, preferred stock and treasury stock for the six-month periods ended September 30, 2010 and 2009, consisted of the following:

17. Equity

Capital stock as of September 30, 2010 and 2009, consisted of the following:

Thousands of Millions of Yen U.S. Dollars

2010 2009 2010

Common stock—authorized, 3,772,000 thousand shares,

issued, 1,650,147 thousand shares, and outstanding,

1,494,254 thousand shares . . . . . . . . . . . . . . . . . . . . . . . . . ¥252,465 ¥252,465 $3,011,996

Preferred stock, Class A Series 4—authorized, issued and

outstanding, 24,072 thousand shares . . . . . . . . . . . . . . . . . 12,036 12,036 143,593

Preferred stock, Class C Series 5—authorized,

433,333 thousand shares, and issued and outstanding,

258,799 thousand shares . . . . . . . . . . . . . . . . . . . . . . . . . . 155,279 155,279 1,852,538

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥419,781 ¥419,781 $5,008,127

Note: the authorized number of shares of common stock and preferred stocks in total was 4,054,871 thousand as of September 30, 2010, while the articles of incorporation prescribe the authorized number of shares for each class of common stock and preferred stock as presented in the table above .

the amount of treasury stock was ¥15,650 million

($186,719 thousand) and ¥15,650 million as of September 30,

2010 and 2009, respectively . the number of treasury shares

as of September 30, 2010 was 155,892,729 shares of com-

mon stock and as of September 30, 2009 was 155,890,395

shares of common stock .

18. Other Ordinary IncomeOther ordinary income for the six-month periods ended September 30, 2010 and 2009, consisted of the following:

Thousands of Millions of Yen U.S. Dollars

2010 2009 2010

Gains on sales of bonds and other securities . . . . . . . . . . . . . ¥11,916 ¥ 6,841 $142,163 Gains on derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 166 —Other* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,248 4,628 50,683

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥16,164 ¥11,636 $192,846

* the ‘Other’ category primarily included gains from investments in partnerships .

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21. Other ExpensesOther expenses for the six-month periods ended September 30, 2010 and 2009, consisted of the following:

Thousands of Millions of Yen U.S. Dollars

2010 2009 2010

Provision of allowance for credit losses on

off-balance-sheet instruments . . . . . . . . . . . . . . . . . . . . . . . ¥ 105 — $ 1,253

Provision of allowance for loan losses . . . . . . . . . . . . . . . . . . . 5,122 ¥ 6,500 61,111

write-off of loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,886 4,130 22,508

losses on sales of stocks and other securities . . . . . . . . . . . . 1 102 13

losses on devaluation of stocks and other securities . . . . . . . 13 — 162

losses on disposal of noncurrent assets . . . . . . . . . . . . . . . . 62 99 748

impairment loss of long-lived assets . . . . . . . . . . . . . . . . . . . . 1 1 13

losses on adjustment for changes of accounting standard

for asset retirement obligations . . . . . . . . . . . . . . . . . . . . . . . 718 — 8,571

Environmental expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208 — 2,490

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,394 2,759 16,631

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥9,513 ¥13,593 $113,500

19. Other IncomeOther income for the six-month periods ended September 30, 2010 and 2009, consisted of the following:

Thousands of Millions of Yen U.S. Dollars

2010 2009 2010

Gains on sales of stocks and other securities . . . . . . . . . . . . . ¥ 0 ¥ 44 $ 1 Gains on investment in money held in trust . . . . . . . . . . . . . . . 270 27 3,222 Recoveries of written-off claims . . . . . . . . . . . . . . . . . . . . . . . 302 414 3,614 Reversal of provision for credit losses on off-balance-sheet instruments . . . . . . . . . . . . . . . . . . . . . . . — 1 —Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,828 1,328 21,818

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥2,401 ¥1,815 $28,655

20. Other Ordinary Expenses Other ordinary expenses for the six-month periods ended September 30, 2010 and 2009, consisted of the following:

Thousands of Millions of Yen U.S. Dollars

2010 2009 2010

Amortization of debenture issuance costs . . . . . . . . . . . . . . . . ¥ 32 ¥ 115 $ 393

losses on foreign exchange transactions . . . . . . . . . . . . . . . . 2,383 4,726 28,435

losses on sales of bonds and other securities . . . . . . . . . . . . 212 54 2,538

losses on devaluation of bonds and other securities . . . . . . . 4,228 264 50,451

losses on derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 — 1,174

Other* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,665 5,527 19,869

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥8,621 ¥10,688 $102,860

* the ‘Other’ category primarily includes losses from investments in partnerships .

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22. Lease Transactionsthe Group leases certain fixed assets, such as system-related equipment and software .

(1) Finance lease transactions which commenced prior to April 1, 2008, are accounted for based on the former accounting standard

Pro forma information on leased property such as acquisition cost, accumulated depreciation, obligation under finance lease

and depreciation expense of finance leases in which substantial ownership of the leased property is not deemed to transfer to the

lessee on an “as if capitalized” basis for the six-month periods ended September 30, 2010 and 2009, were as follows:

Thousands of Millions of Yen U.S. Dollars

2010 2009 2010

tangible fixed assets

Acquisition cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥386 ¥565 $4,611

Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . 365 467 4,361

Net leased property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 20 ¥ 98 $ 250

Pro forma amounts of obligations under finance leases as of September 30, 2010 and 2009, were as follows:

Thousands of Millions of Yen U.S. Dollars

2010 2009 2010

Due within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥17 ¥77 $207

Due after one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 20 43

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥20 ¥98 $250

(2) Operating lease transactions

the minimum rental commitments under non-cancelable operating leases as of September 30, 2010 and 2009, were as follows:

Thousands of Millions of Yen U.S. Dollars

2010 2009 2010

Due within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥81 ¥115 $ 969

Due after one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 106 107

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥90 ¥221 $1,076

Pro forma amounts of depreciation expense under finance leases for the six-month periods ended September 30, 2010 and

2009, were as follows:

Thousands of Millions of Yen U.S. Dollars

2010 2009 2010

Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥35 ¥65 $421

Depreciation expense is calculated using the straight-line method, assuming the residual value is zero . the amounts of acquisition cost, obligations under finance leases and depreciation expense are presented without segregating interest expense due to its immateriality . lease payments under finance leases accounted for based on the former standards were ¥35 million ($421 thousand) and ¥65 million for the six-month periods ended September 30, 2010 and 2009 .

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*1 General allowance for loan losses and specific allowance for loan losses provided to ‘loans and bills discounted’ are separately presented in the above table . Allowance for loan losses provided to ‘Monetary claims bought’ are directly deducted from the carrying amounts due to immateriality .

*2 the carrying values, fair values and their differences do not include investment in partnerships (ie . composing assets consist of monetary claims, etc ., whose fair values are available) . As for the investment in partnerships, the carrying amount was ¥31,721 million ($378,444 thousand), fair value was ¥38,026 million ($453,674 thousand) which were determined as our share of the present value of estimated future cash flows or estimated collectable amount of collaterals or guarantees, and the difference between fair value and carrying amount was ¥6,305 million ($75,231 thousand) .

*3 Derivatives recorded in ‘trading assets,’ ‘trading liabilities,’ ‘Other assets’ and ‘Other liabilities’ are aggregated and shown herein . Assets and liabilities attributable to the derivative contracts are totally offset and the net liability position as a consequence of offsetting would be represented in brackets .

Millions of Yen Thousand of U.S. Dollars

Carrying Fair Carrying Fair Amount value Difference Amount value Difference

Cash and due from banks . . . . . . . . . . . . . . . . ¥ 165,066 ¥ 165,066 ¥ — $ 1,969,299 $ 1,969,299 $ —

Call loans and bills bought . . . . . . . . . . . . . . . . 110,000 110,000 — 1,312,336 1,312,336 —

Monetary claims bought *1 . . . . . . . . . . . . . . . . 62,760 67,070 4,309 748,755 800,171 51,417

trading assets

trading securities . . . . . . . . . . . . . . . . . . . . 1,726 1,726 — 20,597 20,597 —

Money held in trust . . . . . . . . . . . . . . . . . . . . . . 10,087 10,559 472 120,345 125,981 5,636

Securities

Held-to-maturity bonds . . . . . . . . . . . . . . . . 29 30 0 358 364 6

Available-for-sale securities *2 . . . . . . . . . . . 1,202,568 1,202,568 — 14,347,034 14,347,034 —

loans and bills discounted . . . . . . . . . . . . . . . . 2,831,814 33,784,467

less allowance for loan losses *1 . . . . . . . . . (93,997) (1,121,420)

Net loans and bills dicsounted . . . . . . . . . . . . . 2,737,816 2,803,271 65,454 32,663,047 33,443,943 780,895

Assets total . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥4,290,056 ¥4,360,293 ¥70,237 $51,181,771 $52,019,725 $837,954

Deposits (excluding negotiable certificates

of deposit) . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥2,855,576 ¥2,878,477 ¥22,900 $34,067,958 $34,341,173 $273,216

Negotiable certificates of deposit . . . . . . . . . . . 124,310 124,310 — 1,483,059 1,483,059 —

Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 340,378 341,233 854 4,060,832 4,071,028 10,196

Call money and bills sold . . . . . . . . . . . . . . . . . 101,860 101,860 — 1,215,229 1,215,229 —

Payables under securities lending

transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 163,920 163,920 — 1,955,622 1,955,623 —

Borrowed money . . . . . . . . . . . . . . . . . . . . . . . 235,000 235,420 420 2,803,627 2,808,643 5,016

Bonds payable . . . . . . . . . . . . . . . . . . . . . . . . . 91,195 91,564 368 1,087,997 1,092,398 4,401

liabilities total . . . . . . . . . . . . . . . . . . . . . . . . . . ¥3,912,241 ¥3,936,786 ¥24,544 $46,674,324 $46,967,153 $292,829

Derivatives *3

For which hedge accounting is not applied . . ¥ 33,114 ¥ 33,114 ¥ — $ 395,065 $ 395,065 $ —

For which hedge accounting is applied . . . . . 36,953 36,953 — 440,867 440,867 —

Derivatives total . . . . . . . . . . . . . . . . . . . . . . . . ¥ 70,067 ¥ 70,067 ¥ — $ 835,932 $ 835,932 $ —

Fair value and carrying amounts of financial instruments as of September 30, 2010 are shown below . immaterial accounts on the

consolidated balance sheet are not included in the table below . Some instruments, such as unlisted stocks, whose fair value cannot

be reliably determined, are not included in the table below (see note 2) .

Fair value of financial instruments

23. Financial Instruments and Related Disclosuresin March 2008, the ASBJ revised ASBJ Statement No . 10

‘Accounting Standard for Financial instruments’ and issued

ASBJ Guidance No .19 ‘Guidance on Disclosures about Fair

value of Financial instruments .’ this accounting standard and

the guidance are applicable to financial instruments and

related disclosures from the end of the year ended March 31,

2010 with one year deferral permitted for certain quantitative

disclosures of market risk . the Group applied the revised

accounting standard and the new guidance effective March

31, 2010, except for the quantative market risk disclosures

subject to one year deferral .

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(Note 1) Valuation method of financial instruments

Assets

(1) Cash and due from banks, and Call loans and bills

bought

Since these instruments are paid on demand, or cancellable

by short notice, or with short maturities, the fair value of

these instruments is approximately equal to the carrying

value . therefore, the carrying value of these instruments is

deemed as the fair value .

(2) Monetary claims bought

the fair value of trust beneficiary rights, recorded as mone-

tary claims bought, which meet the criteria of securities under

accounting treatment, is measured in the same manner as

described in (5) Securities below .

the fair value of monetary claims bought other than the

above is calculated using the same manner as described in

(6) loans and bills discounted below .

(3) Trading assets

the fair value of trading securities, mainly bonds, are deter-

mined by using market prices quoted at exchanges, or mar-

ket prices announced by certain industry associations or

published by information vendors .

(4) Money held in trust

Securities included in trust on behalf of the Group are valued

in the same manner as described in (5) Securities below .

Monetary claims included in trust on behalf of the Group are

calculated in the same manner as described in (6) loans and

bills discounted below .

(5) Securities

Stocks are valued at market prices quoted at exchanges .

Bonds that have a market price announced by certain

industry associations or published by information vendors are

valued at those prices, in principle . However, Floating Rate

JGBs are valued as shown below . Bonds that do not have

market price announced by certain industry associations

or published by information vendors are valued in the same

manner as described in (6) loans and bills discounted

below or valued at a price provided by brokers or dealers .

investment trust funds are valued at net asset value provided

by the management company of each fund . investment

in partnerships are valued in accordance with the above

method or in the same manner as described in (6) loans and

bills discounted below, depending on the type of underlying

assets of a partnership .

Floating Rate JGBs are stated at the value reasonably

estimated on the basis of internal calculations in consider-

ation of PitF No . 25, ‘Practical Solutions on Measurement

of Fair value for Financial Assets’ issued by the ASBJ . As a

result, in comparison to the valuation based on market price,

‘Securities’ increased by ¥7,384 million ($88,095 thousand),

‘Deferred tax assets’ decreased by ¥3,004 million ($35,846

thousand) and ‘valuation difference on available-for-sale

securities’ increased by ¥4,379 million ($52,249 thousand) as

of September 30, 2010, respectively .

the value reasonably estimated for Floating Rate JGBs

was calculated by discounting the estimated future cash flow

at the rate derived from yields of Japanese national govern-

ment bonds . the yields of Japanese national government

bonds and related volatility are major variables in pricing .

(6) Loans and bills discounted

Fair value of loans and bills discounted is determined as the

present value of estimated future cash flows, discounted by

market interest rates, less accrued interest . the estimated

future cash flows are calculated by adjusting contractual pay-

ment of principal and interest for credit and other significant

risks, which are incorporated mainly through Probability of

Default (‘PD’) and loss Given Default (‘lGD’) . PD is based

on internal credit ratings and lGD is based on the nature

and characteristics of the collaterals and the unsecured

exposures at default . Concerning compound financial

instruments to which bifurcation accounting is applied, the

contractual payments of principal and interest for the calcula-

tions are adjusted to exclude the cash flows from embedded

derivatives which should be bifurcated under bifurcation

accounting .

As for loans to ‘legally bankrupt’ borrowers, ‘De facto

bankrupt’ borrowers and ‘in danger of bankruptcy’ borrow-

ers, the collectable amount through the disposal of collateral

or guarantees, or present value of estimated future cash

flows, etc ., are deemed as fair value .

As for loans with no maturity whose amounts are limited

within the collateral amount, and immaterial loans without

concern of collectability, carrying value of these loans is

deemed as fair value .

Liabilities

(1) Deposits (excluding negotiable certificates of deposit)

Fair value of deposits on demand is deemed as the amounts

payable if demanded on the consolidated balance sheet date

i .e . carrying value . Fair value of time deposits is determined

as at the present value of contractual payment of principal

and interest less accrued interest . the discount rate is the

market interest rate, adjusted with average funding spreads

of the Bank observed within a specified period preceding to

the consolidated balance sheet date . Concerning compound

financial instruments to which bifurcation accounting is

applied, the contractual payments of principal and interest for

the calculations are adjusted to exclude the cash flows from

embedded derivatives which should be bifurcated under

bifurcation accounting .

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(2) Negotiable certificates of deposit

Since the contract period is short, the fair value is approxi-

mately equal to the carrying value . therefore, the carrying

value is deemed as the fair value .

(3) Debentures

Debentures that have a market price announced by certain

industry associations or published by information vendors,

are valued at those prices . For debentures that do not have a

market price announced by certain industry associations or

published by information vendors, fair value for debentures

with short maturities is approximately equal to the carrying

value, therefore, the carrying value is deemed as the fair

value . On the other hand, fair value of debentures other than

the above is calculated in the same manner as for time

deposits described in (1) Deposits (excluding negotiable

certificates of deposit) above .

(4) Call money and bills sold, and Payables under

securities lending transactions

Since the contract period is short, the fair value is approxi-

mately equal to the carrying value . therefore, the carrying

value is deemed as the fair value .

(5) Borrowed money

As for the borrowed money from the Bank of Japan, since

the contract period is short, the fair value is approximately

equal to the carrying value . therefore, the carrying value is

deemed as the fair value .

Fair value of other borrowed money is calculated in the

same manner as for time deposits described in (1) Deposits

(excluding negotiable certificates of deposit) above . Concern-

ing compound financial instruments to which bifurcation

accounting is applied, the contractual payments of principal

and interest for the calculations are adjusted to exclude the

cash flows from embedded derivatives which should be

bifurcated under bifurcation accounting .

(6) Bonds payable

Fair value is based on the market price announced by certain

industry associations or published by information vendors .

Derivatives

the valuation method of derivatives is described in the

footnotes to the respective tables in Note 24, ‘Derivatives .’

(Note 2) Financial instruments whose fair value cannot be reliably determined

the following instruments are not included in ‘Assets (5) Securities’ or ‘Derivatives’ in the above table that shows the fair value of

financial instruments as of September 30, 2010 .

Carrying amount

Thousands of Millions of Yen U.S. Dollars

(1) unlisted stocks, etc .*1 *3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥39,098 $466,454

(2) investment in partnerships *2 *3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,416 470,257

total *4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥78,515 $936,711

*1 Fair value of unlisted stocks, etc ., is exempt from fair value disclosure because they do not have a market price and their fair value cannot be reliably determined .

*2 Fair value of investment in partnerships, comprised of assets whose fair value cannot be reliably determined, such as unlisted stocks, is exempt from fair value disclosure .

*3 the Group wrote off unlisted stocks, etc ., amounting to ¥13 million ($162 thousand) for the six-month period ended September 30, 2010 .*4 in addition, the Bank conducted a total return swap transaction whose contract amount is ¥18,000 million ($214,746 thousand) as of September 30, 2010 .

this instrument, a form of derivative, transfers all risks and returns of an unlisted stock owned by the Bank . Fair value of this instrument is exempt from fair value disclosure because the fair value cannot be reliably determined .

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24. Derivativesa. Derivative transactions for which hedge accounting is not applied

the Group had the following derivative contracts, which were listed on exchanges, outstanding as of September 30, 2010 and 2009:

Millions of Yen Thousands of U.S. Dollars

Contract or Contract or Notional Valuation Notional Valuation Amount Fair Value Gain/(Loss) Amount Fair Value Gain/(Loss)

September 30, 2010

interest rate contracts:

Futures purchased . . . . . . . . . . . . . ¥14,953 — — $178,400 — —

Bond contracts:

Futures written . . . . . . . . . . . . . . . . 14,179 ¥(18) ¥(18) 169,169 $ (225) $ (225)

Futures purchased . . . . . . . . . . . . . 11,557 74 74 137,887 889 889

Futures options purchased . . . . . . . 10,000 20 (4) 119,303 239 (54)

Equity contracts:

index futures purchased . . . . . . . . . 266 5 5 3,177 61 61

index options written . . . . . . . . . . . . 1,270 (4) 3 15,152 (54) 39

index options purchased . . . . . . . . . 1,276 4 (17) 15,226 55 (213)

September 30, 2009

interest rate contracts:

Futures purchased . . . . . . . . . . . . . ¥ 671 ¥ 0 ¥ 0

Bond contracts:

Futures written . . . . . . . . . . . . . . . . 10,594 (71) (71)

Futures purchased . . . . . . . . . . . . . 532 1 1

Equity contracts:

index futures written . . . . . . . . . . . . 126 0 0

index futures purchased . . . . . . . . . 197 0 0

index options written . . . . . . . . . . . . 308 (5) 0 Notes: 1 . the contracts or notional amounts of derivatives which are shown in the above table do not necessarily represent the amounts exchanged by the

parties and do not measure the exposure of the Group to credit or market risk . 2 . Derivative transactions shown above are stated at fair value in the accompanying consolidated financial statements . 3 . Fair values of above derivatives are based on quoted market prices, such as those of tokyo Financial Exchange inc .

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the Group had the following derivative contracts, which were not listed on exchanges, outstanding as of September 30, 2010 and 2009:

Millions of Yen Thousands of U.S. Dollars

Contract or Contract or Notional Valuation Notional Valuation Amount Fair Value Gain/(Loss) Amount Fair Value Gain/(Loss)

September 30, 2010interest rate contracts: interest rate swaps: Receive fixed and pay floating . . . . . ¥8,497,291 ¥232,116 ¥232,116 $101,375,469 $2,769,229 $2,769,229 Receive floating and pay fixed . . . . . 8,621,977 (195,791) (195,791) 102,863,015 (2,335,853) (2,335,853) Receive floating and pay floating . . . 791,793 322 322 9,446,352 3,846 3,846 Receive fixed and pay fixed . . . . . . . 8 0 0 101 0 0 Other contracts written *7 . . . . . . . . . 4,976,469 (94,285) (94,285) 59,370,909 (1,124,858) (1,124,858) Other contracts purchased *7 . . . . . . 4,600,276 90,109 90,109 54,882,802 1,075,032 1,075,032 Foreign exchange contracts: Currency swaps . . . . . . . . . . . . . . . . 372,864 2,497 2,497 4,448,399 29,791 29,791 Forward exchange contracts written . . . . . . . . . . . . . . . . . . . . . . 171,401 2,047 2,047 2,044,879 24,425 24,425 Forward exchange contracts purchased . . . . . . . . . . . . . . . . . . . 164,627 (13,780) (13,780) 1,964,055 (164,408) (164,408) Options written . . . . . . . . . . . . . . . . . 289,891 (15,098) 4,332 3,458,506 (180,129) 51,692 Options purchased . . . . . . . . . . . . . . 313,559 32,570 14,633 3,740,871 388,574 174,577 Credit derivatives: CDS written . . . . . . . . . . . . . . . . . . . 512,551 (30,374) (30,374) 6,114,910 (362,378) (362,378) CDS purchased . . . . . . . . . . . . . . . . 479,186 31,509 31,509 5,716,853 375,920 375,920 inter- and intra-company transactions interest rate swaps: Receive fixed and pay floating . . . . . 193,061 1,673 1,673 2,303,288 19,966 19,966 Receive floating and pay fixed . . . . . 856,181 (7,989) (7,989) 10,214,526 (95,323) (95,323) Currency swaps . . . . . . . . . . . . . . . . 344,551 68 68 4,110,608 816 816 Credit derivatives CDS written . . . . . . . . . . . . . . . . . . 2,900 12 12 34,598 145 145 CDS purchased . . . . . . . . . . . . . . . 2,900 (12) (12) 34,598 (145) (145)

September 30, 2009interest rate contracts: interest rate swaps: Receive fixed and pay floating . . . . . ¥9,770,301 ¥130,770 ¥130,770 Receive floating and pay fixed . . . . . 9,917,668 (110,427) (110,427) Receive floating and pay floating . . . 952,011 706 706 Receive fixed and pay fixed . . . . . . . 459 0 0 Other contracts written *7 . . . . . . . . . 5,398,080 (46,385) (46,385) Other contracts purchased *7 . . . . . . 4,987,794 45,700 45,700 Foreign exchange contracts: Currency swaps . . . . . . . . . . . . . . . . 1,101,003 2,934 2,934 Forward exchange contracts written . . . . . . . . . . . . . . . . . . . . . . 260,276 6,281 6,281 Forward exchange contracts purchased . . . . . . . . . . . . . . . . . . . 214,457 (12,016) (12,016) Options written . . . . . . . . . . . . . . . . . 423,486 (19,518) 3,381 Options purchased . . . . . . . . . . . . . . 439,568 35,314 14,636 Commodity derivatives: Commodity swaps: Receive fixed and pay floating . . . . . 119 42 42 Receive floating and pay fixed . . . . . 118 (41) (41)Credit derivatives: CDS written . . . . . . . . . . . . . . . . . . . 742,851 (102,927) (102,927) CDS purchased . . . . . . . . . . . . . . . . 755,549 127,793 127,793 Notes: 1 . the contracts or notional amounts of derivatives which are shown in the above table do not necessarily represent the amounts exchanged by the

parties and do not measure the exposure of the Group to credit or market risk . 2 . Derivative transactions shown above are stated at fair value in the accompanying consolidated financial statements . 3 . Calculation or quotation of fair value of above derivatives are based on the discounted present value method or option pricing models, etc . 4 . ‘written’ of credit derivatives represents credit risk taking . ‘Purchased’ of credit derivatives represents credit risk transfer . 5 . Foreign exchange profit/loss generated from currency exposure with the final principal settlement of currency swaps, amounting to a loss of ¥2,560

million ($30,551 thousand) as of September 30, 2010, are excluded from ‘Fair value’ and ‘valuation Gain/(loss)’ shown above . 6 . From the end of the year ended March 31, 2010, inter- and intra-company transactions are distinguished from external transactions in the note

information . the outstanding contracts as of September 30, 2009, include such internal contracts . 7 . Other contracts written and purchased of ‘interest rate contracts’ were mainly swaptions .

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25. Per Share of Common Stockthe reconciliation of the differences between basic and diluted net income (loss) per share (EPS) for the six-month periods ended

September 30, 2010 and 2009, was as follows:

Millions Thousands of Yen of Shares Yen U.S. Dollars

Net Weighted-Average Income Number of Shares EPS

Six-month period ended September 30, 2010

Basic EPS—Net income available to common

stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥14,177 1,494,254 ¥9 .48 $0 .11

Effect of dilutive securities—Preferred stocks . . . . . . . . . . . . . — 465,426

Diluted EPS—Net income for computation . . . . . . . . . . . . . . . ¥14,177 1,959,680 ¥7 .23 $0 .09

Six-month period ended September 30, 2009

Basic EPS—Net income available to common

stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥6,456 1,494,258 ¥4 .32

Effect of dilutive securities—Preferred stocks . . . . . . . . . . . . . — 465,426

Diluted EPS—Net income for computation . . . . . . . . . . . . . . . ¥6,456 1,959,684 ¥3 .29

b. Derivative transactions for which hedge accounting is applied

the Group had the following derivatives contracts for which hedge accounting is applied as of September 30, 2010 .

Millions of Yen Thousands of U.S. Dollars

Contract or Contract or Notional Notional Amount Fair Value Amount Fair Value

September 30, 2010

interest rate contracts:

interest rate swaps:

Receive fixed and pay floating . . . . . . . . . . . . . . . . . . . . . . . . . . ¥663,120 ¥6,316 $7,911,238 $75,356

Foreign exchange contracts:

Currency swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288,014 (68) 3,436,101 (816)

Notes: 1 . the contracts or notional amounts of derivatives which are shown in the above table do not necessarily represent the amounts exchanged by the parties and do not measure the exposure of the Group to credit or market risk .

2 . Calculation or quotation of fair value of the above derivatives are based on the discounted present value method or option pricing models, etc . 3 . As for interest rate swaps shown above, deferred hedge accounting is applied in accordance with the JiCPA industry Audit Comittee Report No . 24 . 4 . As for currency swaps shown above, deferred hedge accounting is applied in accordance with the JiCPA industry Audit Comittee Report No . 25 . 5 . the main hedged item for interest rate swaps are interest bearing financial liabilities such as deposits, negotiable certificates of deposit, debentures

and bonds payable . 6 . the main hedged items for currency swaps are foreign currency denominated financial assets or liabilities such as loans and securities . 7 . Foreign exchange profit/loss generated from currency exposure with the final principal settlement of currency swaps, amounting to a gain of

¥30,705 million ($366,327 thousand) as of September 30, 2010, are excluded from ‘Fair value’ shown above .

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1. Segment information

Segment information for the six-month period ended

September 30, 2010, is as follows .

(1) Overview of reportable segments

(a) Identification of operating segments

the Bank has classified its Group’s business operations into

five business groups based upon the nature of the customers

served and products offered: Retail & Business Banking

Group (‘RBBG’), Corporate Banking Group (‘CBG’), Specialty

Finance Group (‘SFG’), Financial institutions Group (‘FiG’) and

Financial Markets Group (‘FMG’) .

Financial information for these groups is regularly reported

to the Management Committee, which is comprised of

appointed executive officers and representative directors,

and is utilized for making management decisions, such as the

allocation of resources and an evaluation of the performance

of each business group .

the Bank has designated these business groups as report-

able segments for the purpose of the disclosures contained in

this document .

(b) Services provided by each reportable segment

RBBG offers financial services mainly to retail customers

and Small- and Medium-sized Entities (‘SMEs’) . For retail

customers, RBBG’s major services are the sale of investment

products including deposits, debentures, investment trusts

and annuity insurance, as well as lending and other financial

services . For SMEs, major services offered by RBBG are

loans and deposits, sales of financial products and other

financial services .

CBG offers financial services to large-cap corporate cus-

tomers as well as public sector clients . Major services offered

by CBG are loans and deposits, acquisition finance, sale of

financial products, financing through securitization, privately

placed bonds and M&A advisory .

SFG offers financial services that require specialized

expertise such as corporate restructuring, real estate finance

and asset-backed finance .

FiG offers financial services to financial institutions . Major

services offered by FiG are the sale of investment products,

including deposits and debentures, loans and financing

through securitization, as well as other financial services .

FMG offers derivative and forex products to customers,

engages in the trading of derivative and forex products, as

well as AlM operations .

On August 16, 2010, the Bank made the following

organizational changes . the following ‘(3) Revenues, profits,

losses, assets and liabilities by reportable segments’ is stated

on a basis of the post-reorganization from the beginning of

this six-month period retroactively .

i) Creation of middle market banking teams; focus on retail

mass affluent market

in order to better focus the Bank’s resources on growing

its middle market business (primarily loans and corporate

financial services for SMEs) and to leverage the Bank’s branch

network and other resources more effectively, the middle

market business functions were transferred from the former

CBG and combined in one group with the former Retail

Banking Group to form RBBG .

ii) Enhancement of solutions to capabilities for large-cap

corporate clients

CBG was reorganized to focus exclusively on large-cap

corporations and to more effectively provide financial solutions

to these clients . the Acquisition & Project Finance Division

was transferred from SFG, and the syndication and securitiza-

tion origination functions, as well as public sector credits were

transferred from FiG .

(i) Segment and related information for the six-month period ended September 30, 2010 under the new standard and guidance, is

as follows .

26. Segment Information ASBJ has issued ‘Accounting Standard for Disclosures about

Segments of an Enterprise and Related information (ASBJ

Statement No .17, March 27, 2009)’ and ‘Guidance on the

Accounting Standard for Disclosures about Segments of an

Enterprise and Related information (ASBJ Guidance No . 20,

March 21, 2008) .’ the Bank applies the new standard and

guidance from the six-month period ended September 30,

2010 .

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(3) Revenues, profits (losses), assets and liabilities by reportable segments

Millions of Yen

RBBG CBG SFG FIG FMG Total

Consolidated net revenue . . . . . . . . . . . . . ¥ 5,824 ¥ 5,112 ¥ 14,292 ¥ 1,944 ¥ 16,596 ¥ 43,770

General and administrative expenses . . . . 4,915 3,452 6,130 1,758 3,816 20,073

Segment profit . . . . . . . . . . . . . . . . . . . . . 909 1,660 8,161 185 12,780 23,697

Segment assets . . . . . . . . . . . . . . . . . . . . 322,319 1,189,231 1,487,513 234,035 1,765,903 4,999,001

Segment liabilities . . . . . . . . . . . . . . . . . . . 2,422,571 305,886 71,689 576,093 936,636 4,312,875

Thousand of U.S. Dollars

RBBG CBG SFG FIG FMG Total

Consolidated net revenue . . . . . . . . . . . . . $ 69,491 $ 60,995 $ 170,510 $ 23,194 $ 198,007 $ 522,197

General and administrative expenses . . . . 58,642 41,185 73,136 20,985 45,534 239,482

Segment profit . . . . . . . . . . . . . . . . . . . . . 10,849 19,809 97,374 2,210 152,473 282,715

Segment assets . . . . . . . . . . . . . . . . . . . . 3,845,371 14,187,919 17,746,519 2,792,114 21,067,800 59,639,723

Segment liabilities . . . . . . . . . . . . . . . . . . . 28,902,064 3,649,320 855,273 6,872,978 11,174,374 51,454,009

Notes: 1 . Due to the nature of the banking business, the Bank uses ‘consolidated net revenue’ as a substitute for ‘sales’ as would be used by non-financial service companies . Consolidated net revenue represents the total of net interest income, net fees and commissions, net trading income and net other ordinary income . the Bank manages its revenue by reportable segment using consolidated net revenue . the Bank manages interest income and interest expenses, internal or external, on a net basis, then, revenue in transactions between reportable segments is not disclosed .

2 . Depreciation expense included in the calculation process of the segment profit (loss) is not disclosed because depreciation expenses are not man-aged by segments . instead, depreciation expenses are partly mingled with general and administrative expenses and are allocated to each reportable segment . the amount of depreciation expense for this six-month period was ¥2,020 million ($24,104 thousand) .

iii) Sharing of deal processes and enhancement of solutions

capabilities for real estate finance transactions

All real estate-related asset portfolios booked at headquarters,

including those previously managed by CBG, were centralized

within SFG . the purpose of the change was to ensure better

consistency in deal valuation and underwriting methodology,

to proactively share monitoring practices and industry knowl-

edge, and to enhance the Bank’s ability to provide solutions

and originate new transactions .

(2) Methodology of calculation of revenues, profits,

losses, assets and liabilities by reportable segments

(a) Basis of accounting for inter-segment transactions

the Bank calculates its net interest income from funding

and investing activities for each reportable segment based

on internal transfer rates, etc . for funds transferred across

reportable segments . internal transfer rates are determined

based on the average market funding cost by currency and

by contractual term or duration, on a transaction by transac-

tion basis .

As for inter-segment transactions other than the above

funding activities, the Bank applies the same basis of

accounting as that used for external transactions .

(b) Difference in allocation basis between a certain asset or

liability and its related profit or loss

while fixed assets are not allocated to the reportable seg-

ments, the associated expenses are allocated to the report-

able segments and included in the segments’ expenses .

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Thousand of Millions of Yen U.S. Dollars

total segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥4,999,001 $59,639,723

Direct write-off of assets and allowance for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (165,598) (1,975,644)

Differences in the basis of asset recognition and measurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,354 51,949

Assets not allocated to reportable segments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147,153 1,755,584

Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,367 16,312

total assets on the consolidated balance sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥4,986,277 $59,487,924

(c) Difference between total segment assets and total assets on the consolidated balance sheets

Note: Assets not allocated to reportable segments include deferred tax assets amounting to ¥35,974 million ($429,182 thousand) and fixed assets amounting to ¥30,289 million ($361,369 thousand) .

Thousand of Millions of Yen U.S. Dollars

total segment liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥4,312,875 $51,454,009

Differences in the basis of liability recognition and measurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 955 11,400

liabilities not allocated to reportable segments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117,318 1,399,639

Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 4

total liabilities on the consolidated balance sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥4,431,148 $52,865,052

(d) Difference between total segment liabilities and total liabilities on the consolidated balance sheets

Note: liabilities not allocated to reportable segments include interests payable amounting to ¥23,996 million ($286,291 thousand) and provision for retirement benefits amounting to ¥14,079 million ($167,974 thousand) .

Thousand of Millions of Yen U.S. Dollars

total segment profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥23,697 $282,715

Differences in the basis of revenue and expense recognition and measurement . . . . . . . . . . . . . . . . (1,239) (14,786)

Amortization of actuarial differences on retirement benefit plans, etc . . . . . . . . . . . . . . . . . . . . . . . . . (324) (3,866)

Credit-related expenses, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,682) (79,726)

Other income and expense items, other than credit-related expenses, etc . . . . . . . . . . . . . . . . . . . . . 258 3,088

Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (327) (3,913)

Net extraordinary income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (688) (8,208)

income before income taxes and minority interests in the consolidated statement of income . . . . . . ¥14,693 $175,304

(b) Difference between total segment profits and the income before income taxes and minority interests in the consolidated

statement of income

Note: Credit-related expenses, etc ., represent the total of write-offs of loans, provision of allowance for loan losses and losses on disposition of non- performing loans .

Thousand of Millions of Yen U.S. Dollars

total consolidated net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥43,770 $522,197

Differences in the basis of revenue and expense recognition and measurement . . . . . . . . . . . . . . . . (1,239) (14,787)

Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (431) (5,147)

Consolidated net revenue in the consolidated statement of income . . . . . . . . . . . . . . . . . . . . . . . . . ¥42,099 $502,263

(4) Reconciliation of the difference between total segment amounts and the consolidated semiannual financial statements

(a) Difference between total consolidated net revenue and consolidated net revenue in the consolidated statement of income

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2. Related information

Related information for the six-month period ended September 30, 2010, was as follows .

(1) Segment information by service

Millions of Yen

Securities Lending investment Derivative Others Total

Ordinary income from external customers . . . . . . . . . . . . . . . ¥33,634 ¥21,310 ¥7,775 ¥7,035 ¥69,756

income from external customers (adjusted) . . . . . . . . . . . . . . 33,634 20,058 5,860 7,035 66,588

Thousand of U.S. Dollars

Securities Lending investment Derivative Others Total

Ordinary income from external customers . . . . . . . . . . . . . . . $401,270 $254,244 $92,759 $83,940 $832,213

income from external customers (adjusted) . . . . . . . . . . . . . . 401,270 239,303 69,914 83,940 794,427

Note: Ordinary income is presented instead of sales for non-financial service companies . On income from external customers (adjusted), ‘Securities invest-ment’ excluded losses on sale of securities, etc ., which were included in ordinary expenses, and ‘Derivative’ excluded expenses related to derivative transactions, etc ., which were included in ordinary expenses .

(2) Segment information by geographic region

(a) Ordinary income

the information by geographic region has been omitted as the transaction data of each customer about interest income, gains on

sale of securities and income related to derivative transactions were not available to be segmented by customers' domicile .

(b) Tangible fixed assets

the information by geographic region has been omitted as the amounts of tangible fixed assets located in Japan exceeded 90% of

the amounts of tangible fixed assets on the consolidated balance sheet as of September 30, 2010 .

(3) Segment information by major customers

the information by major customers has been omitted as ordinary income from any particular customer was less than 10% of

ordinary income on the consolidated statement of income .

3. Segment information on impairment losses on fixed assets by reportable segment

Omitted due to a lack of materiality .

4. Segment information on amortization and unamortized portion of goodwill by reportable segment

Not applicable .

5. Segment information on profit on negative goodwill by reportable segment

Not applicable .

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Consolidated Semiannual Financial Statements

Millions of Yen

Eliminations/ Japan America Europe Asia Subtotal Corporate Consolidated

Ordinary income

(1) External customers . . . . . . ¥71,065 ¥ — ¥5,434 ¥1,428 ¥77,928 ¥ — ¥77,928

(2) inter-segment . . . . . . . . . . . 3,281 — — 60 3,341 (3,341) —

total . . . . . . . . . . . . . . . . . . . . . . 74,347 — 5,434 1,488 81,270 (3,341) 77,928

Ordinary expenses . . . . . . . . . . . 70,384 25 3,137 457 74,005 (3,744) 70,261

Ordinary profit (loss) . . . . . . . . . . ¥ 3,962 ¥ (25) ¥2,297 ¥1,030 ¥ 7,264 ¥ 402 ¥ 7,667

Notes: 1 . the head office and branches of the Bank and consolidated subsidiaries are classified by the above geographic segments after taking into account geographic proximity, business similarity and mutual relations of activities . Ordinary income and ordinary profit (loss) in the above table are equivalent to sales and business profit (loss) for non-financial institutions .

2 . ‘America’ includes the u .S . and Cayman islands . ‘Europe’ includes luxemburg, ireland and the u .K . . ‘Asia’ includes Hong Kong . 3 . interest expenses on funding of consolidated subsidiaries in the Europe segment, provided by the Bank, are calculated based on an average

yield of funding of the Bank’s international operations .

Millions of Yen

Foreign ordinary income (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 6,862

Consolidated ordinary income (B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,928

(A)/(B) (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 .8%

3. Foreign ordinary income

Foreign ordinary income for the six-month period ended September 30, 2009, was as follows:

Notes: 1 . Foreign ordinary income in the above table is equivalent to foreign sales for non-financial institutions . 2 . Foreign ordinary income shows the sum of ordinary income of foreign consolidated subsidiaries excluding income from intra-Group transactions .

Since these transactions are not classified by domiciles of counterparties, segment information classified by domiciles of counterparties is not presented .

(ii) Segment information for the six-month period ended September 30, 2009 under the standard previously applied, is as follows .

1. Business segment information

the Group is engaged in banking activities and other activities such as trusts and other businesses . Business segment information,

however, has not been presented as the percentage of the other activities is not material to the total of all segments .

2. Geographic segment information

information on geographic segments for the six-month period ended September 30, 2009, was as follows:

65

Financial and

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Income Analysis (Consolidated)

Fees and Commissions For the six-month periods ended September 30, 2010 and 2009, and the year ended March 31, 2010

(Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Net fees and commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,321 7,787 13,731

Fees and commissions income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,776 8,342 14,702 Deposits, debentures and loan operations . . . . . . . . . . . . . . . . . . . . 3,848 6,797 11,569 Foreign exchange operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 109 218 Securities-related operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 624 218 452 Agency services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 607 415 956 Safekeeping and safe deposit box services . . . . . . . . . . . . . . . . . . . (0) — 5 Guarantee operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 100 202

Fees and commissions expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 455 555 970 Foreign exchange operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 60 122

Trading RevenuesFor the six-month periods ended September 30, 2010 and 2009, and the year ended March 31, 2010

(Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Net trading revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,809 10,164 17,096

Trading income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,818 10,164 17,134 Gains on trading account securities transactions . . . . . . . . . . . . . . . . . 139 34 91 income from securities and derivatives related to trading transactions . — 1 — income from trading-related financial derivatives transactions . . . . . . . 5,679 10,127 17,043 Other trading income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —

Trading expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 — 38 Expenses on trading securities and derivatives . . . . . . . . . . . . . . . . . . — — — Expenses on securities and derivatives related to trading transactions . 8 — 38 Expenses on trading-related financial derivatives transactions . . . . . . . — — — Other trading expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —

Other Ordinary Income (Net)For the six-month periods ended September 30, 2010 and 2009, and the year ended March 31, 2010

(Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Net other ordinary income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,542 948 829 Gains (losses) on bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,474 6,523 1,349 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 (5,574) (520)

Interest-Earning Assets and Interest-Bearing LiabilitiesFor the six-month periods ended September 30, 2010 and 2009, and the year ended March 31, 2010

(Millions of yen, %)

Average balance Interest income/expenses Return/rates

Sep. 2010 Sep. 2009 Mar. 2010 Sep. 2010 Sep. 2009 Mar. 2010 Sep. 2010 Sep. 2009 Mar. 2010

Interest-earning assets . . . . . 4,416,164 5,049,422 4,896,898 39,897 46,411 89,216 1.80 1.83 1.82 Due from banks . . . . . . . . . 47,918 60,960 58,193 63 96 156 0 .26 0 .31 0 .26 Call loans and bills bought . 89,071 106,612 91,260 50 62 107 0 .11 0 .11 0 .11 Receivables under securities borrowing transactions . . . 55,241 56,241 58,473 33 39 77 0 .12 0 .13 0 .13 Securities . . . . . . . . . . . . . . 1,203,239 1,302,457 1,275,052 7,379 7,676 14,355 1 .22 1 .17 1 .12 loans and bills discounted . 2,940,963 3,426,035 3,320,562 29,764 35,782 68,434 2 .01 2 .08 2 .06 Interest-bearing liabilities . . . 4,015,111 4,748,718 4,563,635 16,452 23,232 42,439 0.81 0.97 0.92 Deposits . . . . . . . . . . . . . . . 2,893,042 2,746,390 2,800,628 11,822 12,797 25,698 0 .81 0 .92 0 .91 Negotiable certificates of deposit . . . . . . . . . . . . . . . 136,677 205,765 204,888 115 528 804 0 .16 0 .51 0 .39 Debentures . . . . . . . . . . . . . 422,470 1,179,548 961,357 2,578 7,109 11,562 1 .21 1 .20 1 .20 Call money and bills sold . . . 99,655 109,557 110,693 85 87 168 0 .17 0 .15 0 .15 Payables under repurchase agreements . . . . . . . . . . . — 10,309 16,555 — 35 60 — 0 .69 0 .36 Payables under securities lending transactions . . . . . . 106,619 38,893 65,099 139 155 251 0 .26 0 .79 0 .38 Borrowed money . . . . . . . . 270,428 355,019 307,841 241 885 1,239 0 .17 0 .49 0 .40 Bonds payable . . . . . . . . . . 91,192 108,663 101,970 760 877 1,654 1 .66 1 .61 1 .62

Note: interest expenses are shown after deduction of amounts of assumed cost of funding money held in trust (¥19 million for the six-month period ended September 30, 2010, ¥25 million for the six-month period ended September 30, 2009, and ¥49 million for the year ended March 31, 2010) .

Incom

e Analysis (C

onso

lidated

)

66

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Non-Consolidated Financial HighlightsFor the six-month periods ended September 30, 2010, 2009 and 2008, and the years ended March 31, 2010 and 2009

(Millions of yen)

Sep. 30, 2010 Sep. 30, 2009 Sep. 30, 2008 Mar. 31, 2010 Mar. 31, 2009

Ordinary income . . . . . . . . . . . . . . . . . . . . . . . . 68,071 74,567 114,015 140,784 177,811

Ordinary profit (loss) . . . . . . . . . . . . . . . . . . . . . 15,680 5,371 (39,658) 5,011 (235,912)

Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . 14,681 5,284 (31,565) 7,644 (245,281)

Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 419,781 419,781 419,781 419,781 419,781

Number of issued shares (in thousands) Common stock . . . . . . . . . . . . . . . . . . . . . . . 1,650,147 1,650,147 1,650,147 1,650,147 1,650,147 Class A Series 4 preferred stock . . . . . . . . . . 24,072 24,072 24,072 24,072 24,072 Class C Series 5 preferred stock . . . . . . . . . . 258,799 258,799 258,799 258,799 258,799

total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 556,824 539,846 725,522 538,890 530,452

total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,994,823 5,536,438 6,814,047 5,166,373 6,091,269

Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 340,378 918,707 2,029,297 562,122 1,489,693

Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,988,221 3,031,541 3,053,751 3,099,946 2,946,098

loans and bills discounted . . . . . . . . . . . . . . . . 2,840,032 3,083,478 3,929,406 3,069,200 3,194,302

Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,361,167 1,611,075 1,877,763 1,325,045 1,479,980

total equity per share (yen) . . . . . . . . . . . . . . . . 252 .61 241 .25 330 .98 239 .16 233 .51

Dividends per share (yen) Common stock . . . . . . . . . . . . . . . . . . . . . . . — — — 0 .70 — Class A Series 4 preferred stock . . . . . . . . . . — — — 10 .00 10 .00 Class C Series 5 preferred stock . . . . . . . . . . — — — 7 .44 7 .44

(interim dividends per share) . . . . . . . . . . . . . (Common stock) . . . . . . . . . . . . . . . . . . . . . (—) (—) (—) (—) (—) (Class A Series 4 preferred stock) . . . . . . . . . (—) (—) (—) (—) (—) (Class C Series 5 preferred stock) . . . . . . . . . (—) (—) (—) (—) (—)

Basic net income (loss) per share (yen) . . . . . . . 9 .82 3 .53 (19 .12) 3 .66 (152 .61)

Diluted net income per share (yen) . . . . . . . . . . . 7 .49 2 .69 — 3 .54 —

Dividend payout ratio (%) . . . . . . . . . . . . . . . . . . — — — 19 .09 —

Capital adequacy ratio (domestic standard) (%) . . . . . . . . . . . . . . . . . . 15 .66 13 .22 13 .81 14 .09 11 .72

Number of employees . . . . . . . . . . . . . . . . . . . . 1,497 1,505 1,445 1,486 1,440

Notes: 1 . total equity per share, basic net income per share and diluted net income per share are calculated by applying Financial Accounting Standard No . 2, ‘Accounting Standard for Earnings per share’ and Financial Accounting Standards implementation Guidance No . 4, ‘implementation Guidance for Accounting Standard for Earnings per Share .’

2 . Number of employees does not include executive officers, locally hired overseas staff or the Bank’s employees seconded to other firms . 3 . Although potentially dilutive shares exist, diluted net income per share is not shown for the six-month period ended September 30, 2008 and the

year ended March 31, 2009, as a net loss is recorded for these periods . 4 . Deposits include negotiable certificates of deposit (NCDs) .

No

n-Co

nsolid

ated B

usiness Results

Non-Consolidated Business Results

67

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No

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ated

Cap

ital Ad

equacy R

atio

(Do

mestic S

tandard

)

(A)

(K)

(E)

(K)

(Millions of yen)

Sep. 30, 2010 Mar. 31, 2010

Tier I Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 419,781 419,781 Non-cumulative perpetual preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . 167,315 167,315 Newly issued stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Capital reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,333 33,333 Other capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Earned surplus reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,529 7,886 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98,226 87,399 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,650 15,650 Paid-in amount on treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — unappropriated profits to be distributed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 3,212 valuation loss on available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . — — Subscription rights to shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Amount equal to goodwill derived from acquisitions . . . . . . . . . . . . . . . . . . . . — — intangible assets derived from mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Amount equivalent to capital increased by securitization transactions . . . . . . . — — Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (A) 544,219 529,538 Step-up preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —

Tier II Forty-five percent of the difference between fair value and book value in respect of land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — General allowance for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,463 21,923 Subordinated debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Perpetual subordinated liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Subordinated term liabilities and subordinated term preferred stock . . . . . . — — Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,463 21,923 Tier II capital qualifying as capital . . . . . . . . . . . . . . . . . . . . . . . . (B) 20,463 21,923

Tier III Short-term subordinated debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Tier III capital qualifying as capital . . . . . . . . . . . . . . . . . . . . . . . . (C) — —

Items deducted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (D) 51,637 57,125

Regulatory capital (A) + (B) + (C) – (D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (E) 513,045 494,336

Risk-weighted Balance-sheet exposure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,813,755 3,011,197 assets Off-balance-sheet exposure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238,515 240,640 Credit risk assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (F) 3,052,270 3,251,838 Risk assets derived from market risk equivalents ((H)/8%) . . . . . . . . . (G) 106,176 129,719 Market risk equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (H) 8,494 10,377 Risk assets derived from operational risk equivalents ((J)/8%) . . . . . . ( I ) 115,675 126,263 Operational risk equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (J) 9,254 10,101 (F) + (G) + ( I ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (K) 3,274,122 3,507,821

Capital adequacy ratio (Domestic standard) × 100 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.66% 14.09%

Tier I ratio (Domestic standard) × 100 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.62% 15.09%

Required capital total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130,964 140,312

Notes: 1 . the capital adequacy ratio is calculated using the formula stipulated in a ministerial notification based on Article 14-2 of the Banking law (FSA Notification Number 19, issued in 2006) . FSA Notification Number 79, issued on 2008, is also applied for calculation .

Aozora uses the domestic standard applicable to Japanese banks without overseas branches or banking subsidiaries . the capital adequacy ratios are based on the FSA guidelines established to implement Basel ii . 2 . items deducted (D) include the amount held at other financial institutions for their capital-raising purposes . 3 . Methods used to calculate risk-weighted assets are as follows: credit risk assets use the standardized approach; market risk equivalents use the

internal models approach and the standardized approach; operational risk equivalents use the standardized approach . 4 . Amounts of required capital for each risk are as follows: (Millions of yen)

Sep. 30, 2010 Mar. 31, 2010

Credit risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122,090 130,073 Market risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,247 5,188 Operational risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,627 5,050

No

n-Co

nsolid

ated C

apital A

deq

uacy Ratio

(Do

mestic S

tandard

)

Non-Consolidated Capital Adequacy Ratio (Domestic Standard)

68

Financial and

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rate Data

No

n-Co

nsolid

ated

Financial Statem

ents

Thousands of Millions of Yen U.S. Dollars

LIABILITIES AND EQUITY Sep. 30, 2010 Sep. 30, 2009 Mar. 31, 2010 Sep. 30, 2010

LIABILITIES: Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥2,988,221 ¥3,031,541 ¥3,099,946 $35,650,457 Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 340,378 918,707 562,122 4,060,832 Call money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,860 90,000 100,049 1,215,229 Payables under repurchase agreements . . . . . . . . . . . . . . . . . . . . — 20,340 — — Payables under securities lending transactions . . . . . . . . . . . . . . . 163,920 92,523 103,825 1,955,622 trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 322,373 229,444 204,905 3,846,018 Borrowed money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235,000 284,659 266,200 2,803,627 Foreign exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1 1 18 Bonds payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91,195 91,188 91,192 1,087,997 Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152,862 199,308 156,626 1,823,705 Provision for retirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,052 14,743 15,350 167,646 Provision for directors’ retirement benefits . . . . . . . . . . . . . . . . . . . 196 131 182 2,341 Provision for credit losses on off-balance-sheet instruments . . . . . . 2,271 2,246 2,016 27,101 Acceptances and guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,664 21,755 25,062 306,187

total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,437,999 4,996,592 4,627,482 52,946,780

EQUITY: Capital stock Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252,465 252,465 252,465 3,011,996 Preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167,315 167,315 167,315 1,996,131 Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,333 33,333 33,333 397,678 Retained earnings legal retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,529 7,886 7,886 101,756 Other retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98,226 85,038 87,399 1,171,879 valuation difference on available-for-sale securities . . . . . . . . . . . . . 9,168 5,656 2,864 109,380 Deferred gains or losses on hedges . . . . . . . . . . . . . . . . . . . . . . . . 3,436 3,800 3,276 40,996 treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15,650) (15,650) (15,650) (186,719)

total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 556,824 539,846 538,890 6,643,097

tOtAl . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥4,994,823 ¥5,536,438 ¥5,166,373 $59,589,877

Note: the translation of Japanese yen amounts into u .S . dollar amounts is included solely for the convenience of readers outside Japan and has been made at the rate of ¥83 .82 to $1 .00, the rate of exchange at September 30, 2010 .

Non-Consolidated Balance Sheets (Unaudited)Aozora Bank, ltd .As of September 30, 2010 and 2009 , and March 31, 2010

Thousands of Millions of Yen U.S. Dollars

ASSETS Sep. 30, 2010 Sep. 30, 2009 Mar. 31, 2010 Sep. 30, 2010

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 112,753 ¥ 121,767 ¥ 187,212 $ 1,345,190 Due from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,464 39,427 45,896 482,759 Call loans and bills bought . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,000 100,000 50,000 1,312,336 Receivables under securities borrowing transactions . . . . . . . . . . . . . — — — —Monetary claims bought . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,957 48,798 39,835 369,339 trading assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 386,731 371,849 299,650 4,613,838 Money held in trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,768 5,266 5,760 68,815 Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,361,167 1,611,075 1,325,045 16,239,168 loans and bills discounted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,840,032 3,083,478 3,069,200 33,882,518 Foreign exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,462 17,925 13,448 160,612 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111,983 184,816 158,225 1,336,000 tangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,423 23,964 23,307 279,448 intangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,223 8,959 8,238 86,179 Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,195 35,260 40,088 419,897 Customers’ liabilities for acceptances and guarantees . . . . . . . . . . . . 25,664 21,755 25,062 306,187 Allowance for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (101,120) (123,665) (116,233) (1,206,401)Allowance for investment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,885) (14,239) (8,367) (106,008)

tOtAl . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥4,994,823 ¥5,536,438 ¥5,166,373 $59,589,877

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Non-Consolidated Semiannual Financial Statements

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Financial Statem

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Non-Consolidated Statements of Income (Unaudited)Aozora Bank, ltd .For the six-month periods ended September 30, 2010 and 2009, and the year ended March 31, 2010

Thousands of Millions of Yen U.S. Dollars

Sep. 30, 2010 Sep. 30, 2009 Mar. 31, 2010 Sep. 30, 2010 (6 months) (6 months) (1 year) (6 months)

INCOME: interest income: interest on loans and discounts . . . . . . . . . . . . . . . . . . . . . . . . . ¥29,461 ¥30,632 ¥ 59,778 $351,485 interest and dividends on securities . . . . . . . . . . . . . . . . . . . . . . 7,270 11,439 20,982 86,737 interest on deposits with banks . . . . . . . . . . . . . . . . . . . . . . . . . 50 68 116 602 Other interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,638 2,793 6,162 31,477 Fees and commissions income . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,541 7,972 13,942 66,116 trading income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,679 9,300 16,107 67,755 Other ordinary income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,613 11,970 22,710 186,268 Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,149 1,294 2,256 25,639

total income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,403 75,471 142,056 816,079

EXPENSES: interest expenses: interest on deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,938 13,332 26,511 142,430 interest on debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,578 7,109 11,562 30,769 interest on borrowings and rediscounts . . . . . . . . . . . . . . . . . . . 325 973 1,407 3,889 Other interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,629 1,759 2,899 19,439 Fees and commissions expenses . . . . . . . . . . . . . . . . . . . . . . . . . 503 558 991 6,005 trading expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 38 100 Other ordinary expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,636 10,265 22,368 114,970 General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . 19,105 21,373 42,677 227,932 Other expens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,638 13,883 27,383 91,129

total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,365 69,255 135,840 636,663

INCOME BEFORE INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . . 15,038 6,216 6,216 179,416

INCOME TAXES: Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 14 64 68 Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351 918 (1,493) 4,188

total income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 356 932 (1,428) 4,256

NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥14,681 ¥ 5,284 ¥ 7,644 $175,160

Yen U.S. Dollars

Sep. 30, 2010 Sep. 30, 2009 Mar. 31, 2010 Sep. 30, 2010 (6 months) (6 months) (1 year) (6 months)

PER SHARE INFORMATION: Basic net income per share of common stock . . . . . . . . . . . . . . . . ¥9 .82 ¥3 .53 ¥ 3 .66 $0 .11 Diluted net income per share of common stock . . . . . . . . . . . . . . . 7 .49 2 .69 3 .54 0 .08 Cash dividends applicable to the period/year: Class A Series 4 preferred stock . . . . . . . . . . . . . . . . . . . . . . . . — — 10 .00 — Class C Series 5 preferred stock . . . . . . . . . . . . . . . . . . . . . . . . — — 7 .44 — Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 0 .70 —

Note: the translation of Japanese yen amounts into u .S . dollar amounts is included solely for the convenience of readers outside Japan and has been made at the rate of ¥83 .82 to $1 .00, the rate of exchange at September 30, 2010 .

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Non-Consolidated Statements of Changes in Equity (Unaudited)Aozora Bank, ltd .For the six-month periods ended September 30, 2010 and 2009, and the year ended March 31, 2010

Thousands of Millions of Yen U.S. Dollars

Sep. 30, 2010 Sep. 30, 2009 Mar. 31, 2010 Sep. 30, 2010

Common stock: Balance at the beginning of current period . . . . . . . . . . . . . . . . . ¥252,465 ¥252,465 ¥252,465 $3,011,996

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . 252,465 252,465 252,465 3,011,996

Preferred stock: Balance at the beginning of current period . . . . . . . . . . . . . . . . . 167,315 167,315 167,315 1,996,131

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . 167,315 167,315 167,315 1,996,131

Capital surplus: Balance at the beginning of current period . . . . . . . . . . . . . . . . . 33,333 33,333 33,333 397,678

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . 33,333 33,333 33,333 397,678

Retained earnings: legal retained earnings: Balance at the beginning of current period . . . . . . . . . . . . . . . . . 7,886 7,453 7,453 94,091 Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 642 433 433 7,665

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . 8,529 7,886 7,886 101,756

Other retained earnings: Balance at the beginning of current period . . . . . . . . . . . . . . . . . 87,399 82,354 82,354 1,042,705 Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,854) (2,599) (2,599) (45,987) Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,681 5,284 7,644 175,161

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . 98,226 85,038 87,399 1,171,879

valuation difference on available-for-sale securities: Balance at the beginning of current period . . . . . . . . . . . . . . . . . 2,864 (449) (449) 34,170 Net change of items during the period . . . . . . . . . . . . . . . . . . . . 6,304 6,105 3,313 75,210

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . 9,168 5,656 2,864 109,380

Deferred gains or losses on hedges: Balance at the beginning of current period . . . . . . . . . . . . . . . . . 3,276 3,630 3,630 39,086 Net change of items during the period . . . . . . . . . . . . . . . . . . . . 160 170 (354) 1,910

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . 3,436 3,800 3,276 40,996

treasury stock: Balance at the beginning of current period . . . . . . . . . . . . . . . . . (15,650) (15,650) (15,650) (186,718) Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0) (0) 0 (1)

Balance at the end of current period . . . . . . . . . . . . . . . . . . . . . (15,650) (15,650) (15,650) (186,719)

total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥556,824 ¥539,846 ¥538,890 $6,643,097

Note: the translation of Japanese yen amounts into u .S . dollar amounts is included solely for the convenience of readers outside Japan and has been made at the rate of ¥83 .82 to $1 .00, the rate of exchange on September 30, 2010 .

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71

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Net Revenue, Business Profit For the six-month periods ended September 30, 2010 and 2009, and the year ended March 31, 2010

(Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Domestic International Domestic International Domestic International Total operations operations Total operations operations Total operations operations

Net interest income . . . . . . . . . . 22,967 17,270 5,697 21,785 15,399 6,385 44,708 32,039 12,668 interest income . . . . . . . . . . . . 39,420 32,819 10,430 44,934 37,303 13,076 87,040 72,663 24,667 — [3,829] — — [5,445] — — [10,290] — interest expense . . . . . . . . . . . 16,452 15,549 4,732 23,149 21,903 6,691 42,332 40,624 11,998 — — [3,829] — — [5,445] — — [10,290]Net fees and commissions . . . . 5,038 4,717 321 7,413 6,820 593 12,951 11,507 1,443 Fees and commissions (income) . . . . . . . . . . . . . . . . 5,541 4,996 545 7,972 7,157 815 13,942 12,105 1,837 Fees and commissions (expenses) . . . . . . . . . . . . . . 503 279 224 558 336 221 991 597 393 Net trading revenues . . . . . . . . . 5,670 12,058 (6,388) 9,300 (390) 9,691 16,068 (6,280) 22,349 trading profits . . . . . . . . . . . . . 5,679 12,067 (6,388) 9,300 (390) 9,691 16,107 (6,278) 22,385 trading losses . . . . . . . . . . . . 8 8 — — — — 38 2 35 Net other ordinary income . . . . 5,976 (83) 6,059 1,705 7,014 (5,309) 342 6,984 (6,642) Other ordinary income . . . . . . 15,613 7,832 7,780 11,970 8,449 3,521 22,710 16,087 6,623 Other ordinary expenses . . . . . 9,636 7,915 1,721 10,265 1,434 8,830 22,368 9,102 13,265 Net revenue . . . . . . . . . . . . . . . . 39,653 33,962 5,690 40,204 28,843 11,361 74,070 44,251 29,819 Net revenue ratio (%) . . . . . . . . 1.78 1.56 1.21 1.58 1.14 2.09 1.50 0.90 2.80 Business profit . . . . . . . . . . . . . 18,560 — — 11,023 — — 35,844 — —

Notes: 1 . Domestic operations include yen-denominated transactions by domestic offices, while international operations include foreign currency-denominated transactions by domestic offices and transactions by overseas offices . yen-denominated nonresident transactions and Japan offshore banking accounts are included under international operations .

2 . interest expenses are shown after deduction of amounts equivalent to interest expenses on money held in trust (¥19 million for the six-month period ended September 30, 2010, ¥25 million for the six-month period ended September 30, 2009, and ¥49 million for the year ended March 31, 2010)

3 . Figures in brackets [ ] indicate interest received/paid as a result of interdepartmental lending and borrowing activities between domestic and international operations .

4 . Net revenue ratio is calculated as follows: net revenue*

Net revenue ratio =

average balance of interest-bearing assets X 100

*As for the 6-month periods ended on September 30, the numerator is annualized . 5 . Business profit is calculated by deducting the net provision to general allowance for loan losses and general and administrative expenses from

net revenue .

RatiosFor the six-month periods ended September 30, 2010 and 2009, and the year ended March 31, 2010

(%)

Sep. 2010 Sep. 2009 Mar. 2010

Ordinary profit to total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 .62 0 .18 0 .09 Ordinary profit to equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 .70 2 .00 0 .93 Net income to total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 .58 0 .18 0 .13 Net income to equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 .34 1 .96 1 .42

Notes: 1 . Return on assets, as calculated ordinary profit or net income* using ordinary profit or net income

= (average balance of total assets — customers’ liabilities for acceptances and guarantees)

X 100

2 . Return on equity, as calculated ordinary profit or net income* using ordinary profit or net income

= (equity, beginning of period + equity, end of period) ÷ 2

X 100

* As for the 6-month periods ended on September 30, the numerator is annualized .

Yield on Interest-Earning Assets, Interest Rate on Interest-Bearing Liabilities, Net Yield/Interest RateFor the six-month periods ended September 30, 2010 and 2009, and the year ended March 31, 2010

(%)

Sep. 2010 Sep. 2009 Mar. 2010

Domestic International Domestic International Domestic International Total operations operations Total operations operations Total operations operations

yield on interest-earning assets . . 1 .77 1 .51 2 .22 1 .76 1 .47 2 .41 1 .76 1 .49 2 .31 interest rate on interest-bearing liabilities . . . . . . . . . . . . . . . . . . 1 .74 1 .69 1 .22 1 .82 1 .74 1 .40 1 .81 1 .76 1 .30 Net yield/interest rate . . . . . . . . . 0 .03 (0 .18) 1 .00 (0 .06) (0 .27) 1 .01 (0 .05) (0 .27) 1 .01

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Average Balance of Interest-Earning Assets and Interest-Bearing Liabilities (Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Domestic International Domestic International Domestic International Total operations operations Total operations operations Total operations operations

Balance of interest- Average balance 4,428,563 4,326,536 936,224 5,068,069 5,035,106 1,081,128 4,918,602 4,871,050 1,064,833 earning assets Interest income/expense 39,420 32,819 10,430 44,934 37,303 13,076 87,040 72,663 24,667 Return/rates (%) 1.77% 1.51% 2.22% 1.76% 1.47% 2.41% 1.76% 1.49% 2.31%

Cash and due from Average balance 37,765 141 37,623 43,498 12 43,485 41,883 495 41,387 banks interest income/expense 50 0 50 68 0 68 116 0 116 Return/rates (%) 0 .26% 0 .03% 0 .26% 0 .31% 0 .29% 0 .31% 0 .27% 0 .04% 0 .28%

Call loans Average balance 89,071 89,071 — 106,612 106,612 0 91,260 91,260 0 interest income/expense 50 50 — 62 62 0 107 107 0 Return/rates (%) 0 .11% 0 .11% — 0 .11% 0 .11% 0 .71% 0 .11% 0 .11% 0 .71%

Receivables under Average balance 55,241 55,241 — 56,241 56,241 — 58,473 58,473 — securities borrowing interest income/expense 33 33 — 39 39 — 77 77 — transactions Return/rates (%) 0 .12% 0 .12% — 0 .13% 0 .13% — 0 .13% 0 .13% —

Bills bought Average balance — — — — — — — — — interest income/expense — — — — — — — — — Return/rates (%) — — — — — — — — —

Securities Average balance 1,249,903 912,903 336,999 1,640,428 1,033,996 606,432 1,596,228 994,006 602,222 interest income/expense 7,270 3,675 3,594 11,439 3,597 7,842 20,982 6,212 14,770 Return/rates (%) 1 .16% 0 .80% 2 .12% 1 .39% 0 .69% 2 .57% 1 .31% 0 .62% 2 .45%

loans and bills Average balance 2,943,077 2,395,520 547,557 3,153,658 2,735,958 417,700 3,065,139 2,659,872 405,267 discounted interest income/expense 29,410 22,640 6,770 30,570 25,535 5,034 59,671 49,928 9,743 Return/rates (%) 1 .99% 1 .88% 2 .46% 1 .93% 1 .86% 2 .40% 1 .94% 1 .87% 2 .40%

Balance of interest- Average balance 4,024,097 3,883,286 975,009 4,762,195 4,645,614 1,164,746 4,576,044 4,441,481 1,151,844 bearing liabilities Interest income/expense 16,452 15,549 4,732 23,149 21,903 6,691 42,332 40,624 11,998 Return/rates (%) 0.81% 0.79% 0.96% 0.96% 0.94% 1.14% 0.92% 0.91% 1.04%

Deposits Average balance 2,902,035 2,877,507 24,528 2,774,148 2,746,421 27,727 2,822,221 2,795,899 26,322 interest income/expense 11,823 11,807 15 12,804 12,765 38 25,707 25,654 52 Return/rates (%) 0 .81% 0 .81% 0 .12% 0 .92% 0 .92% 0 .27% 0 .91% 0 .91% 0 .20%

Negotiable certificates Average balance 136,677 136,677 — 205,765 205,765 — 204,888 204,888 — of deposit interest income/expense 115 115 — 528 528 — 804 804 — Return/rates (%) 0 .16% 0 .16% — 0 .51% 0 .51% — 0 .39% 0 .39% —

Debentures Average balance 422,470 422,470 — 1,179,548 1,179,548 — 961,357 961,357 — interest income/expense 2,578 2,578 — 7,109 7,109 — 11,562 11,562 — Return/rates (%) 1 .21% 1 .21% — 1 .20% 1 .20% — 1 .20% 1 .20% —

Call money Average balance 99,655 90,000 9,655 109,557 109,557 — 110,693 109,062 1,630 interest income/expense 85 59 25 87 87 — 168 162 6 Return/rates (%) 0 .17% 0 .13% 0 .52% 0 .15% 0 .15% — 0 .15% 0 .14% 0 .37%

Payable under Average balance — — — 10,309 — 10,309 16,555 — 16,555 repurchase interest income/expense — — — 35 — 35 60 — 60 agreements Return/rates (%) — — — 0 .69% — 0 .69% 0 .36% — 0 .36%

Payable under Average balance 106,619 — 106,619 38,893 — 38,893 65,099 — 65,099 securities lending interest income/expense 139 — 139 155 — 155 251 — 251 transactions Return/rates (%) 0 .26% — 0 .26% 0 .79% — 0 .79% 0 .38% — 0 .38%

Bills sold Average balance — — — — — — — — — interest income/expense — — — — — — — — — Return/rates (%) — — — — — — — — —

Borrowed money Average balance 270,428 270,428 — 355,019 315,369 39,649 307,841 282,886 24,954 interest income/expense 240 240 — 885 648 237 1,239 942 297 Return/rates (%) 0 .17% 0 .17% — 0 .49% 0 .41% 1 .19% 0 .40% 0 .33% 1 .19%

Corporate bonds Average balance 91,192 91,192 — 94,383 94,383 — 92,788 92,788 — interest income/expense 760 760 — 787 787 — 1,539 1,539 — Return/rates (%) 1 .66% 1 .66% — 1 .66% 1 .66% — 1 .65% 1 .65% —

Notes: 1 . interest-earning assets are shown after deduction of the average balance of non-interest-earning deposits . interest-bearing liabilities are shown after deduction of amounts equivalent to the average balance of money held in trust and corresponding interest .

2 . Figures in brackets [ ] indicate the average balances of interdepartmental lending and borrowing activities between domestic and overseas operations and corresponding interest income/expenses .

3 . the average balance of foreign-currency-denominated transactions by domestic offices in international operations has been calculated using the daily current method .

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Analysis of Interest Income and Interest Expenses (Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Domestic International Domestic International Domestic International Total operations operations Total operations operations Total operations operations

Interest Income Volume-related increase (decrease) (5,669) (5,249) (1,752) (16,456) (10,370) (6,348) (24,584) (16,953) (9,422) Rate-related increase (decrease) 156 766 (893) (6,455) 369 (6,761) (10,876) 1,023 (11,739) Net increase (decrease) (5,513) (4,483) (2,646) (22,911) (10,000) (13,110) (35,460) (15,930) (21,162)

Cash and due volume-related increase (decrease) (9) 0 (9) (10) (22) 112 (287) (65) (202) from banks Rate-related increase (decrease) (9) (0) (8) (412) (0) (513) (453) (4) (467) Net increase (decrease) (18) 0 (18) (423) (22) (401) (741) (70) (670)

Call loans volume-related increase (decrease) (10) (10) (0) (198) (195) (7) (410) (392) (31) Rate-related increase (decrease) (1) (1) — (214) (210) (0) (259) (245) (0) Net increase (decrease) (12) (12) (0) (413) (406) (7) (670) (638) (31)

Receivables under volume-related increase (decrease) (0) (0) — (597) (597) — (491) (491) — securities borrowing Rate-related increase (decrease) (5) (5) — (118) (118) — (233) (233) — transactions Net increase (decrease) (5) (5) — (716) (716) — (725) (725) —

Bills bought volume-related increase (decrease) — — — (3) (3) — (50) (50) — Rate-related increase (decrease) — — — — — — 0 0 — Net increase (decrease) — — — (3) (3) — (50) (50) —

Securities volume-related increase (decrease) (2,723) (421) (3,484) (5,572) (1,211) (5,333) (5,860) (729) (7,321) Rate-related increase (decrease) (1,445) 499 (763) (5,766) (1,758) (3,035) (11,044) (2,716) (6,138) Net increase (decrease) (4,168) 78 (4,247) (11,338) (2,969) (8,368) (16,905) (3,445) (13,459)

loans and bills volume-related increase (decrease) (2,041) (3,177) 1,565 (8,148) (6,637) (1,139) (14,253) (11,840) (1,841) discounted Rate-related increase (decrease) 882 282 170 (2,687) 133 (3,192) (3,855) 462 (4,889) Net increase (decrease) (1,159) (2,894) 1,735 (10,835) (6,503) (4,332) (18,108) (11,378) (6,730)

Interest expenses Volume-related increase (decrease) (3,587) (3,594) (1,089) (7,564) (4,935) (3,323) (12,629) (9,199) (5,519) Rate-related increase (decrease) (3,108) (2,759) (868) (5,909) 425 (5,840) (12,100) (1,697) (9,945) Net increase (decrease) (6,696) (6,354) (1,958) (13,474) (4,510) (9,163) (24,729) (10,896) (15,465)

Deposits volume-related increase (decrease) 590 609 (4) 1,554 1,506 29 3,405 3,326 41 Rate-related increase (decrease) (1,571) (1,567) (18) 1,210 1,255 (27) 1,473 1,560 (49) Net increase (decrease) (981) (957) (23) 2,764 2,761 2 4,878 4,887 (8)

Negotiable volume-related increase (decrease) (177) (177) — (1,874) (1,874) — (2,450) (2,450) — certificates Rate-related increase (decrease) (235) (235) — (203) (203) — (697) (697) — of deposit Net increase (decrease) (413) (413) — (2,078) (2,078) — (3,148) (3,148) —

Debentures volume-related increase (decrease) (4,563) (4,563) — (4,871) (4,871) — (10,820) (10,820) — Rate-related increase (decrease) 32 32 — 627 627 — 734 734 — Net increase (decrease) (4,530) (4,530) — (4,244) (4,244) — (10,085) (10,085) —

Call money volume-related increase (decrease) (7) (15) — (1,199) (262) (1,333) (1,123) (220) (1,570) Rate-related increase (decrease) 5 (12) 25 (633) (236) — (1,096) (389) (40) Net increase (decrease) (2) (27) 25 (1,832) (499) (1,333) (2,220) (609) (1,610)

Payable under volume-related increase (decrease) (35) — (35) (212) — (212) (274) — (274) repurchase Rate-related increase (decrease) — — — (97) — (97) (380) — (380) agreements Net increase (decrease) (35) — (35) (309) — (309) (654) — (654)

Payable under volume-related increase (decrease) 270 — 270 (1,955) (0) (1,954) (1,703) (0) (1,701) securities lending Rate-related increase (decrease) (286) — (286) (509) — (510) (1,969) — (1,971) transactions Net increase (decrease) (16) — (16) (2,464) (0) (2,464) (3,673) (0) (3,673)

Bills sold volume-related increase (decrease) — — — — — — — — — Rate-related increase (decrease) — — — — — — — — — Net increase (decrease) — — — — — — — — —

Borrowed money volume-related increase (decrease) (211) (92) (237) 524 349 — (9) (70) 120 Rate-related increase (decrease) (433) (315) — (680) (743) 237 (1,221) (1,206) (74) Net increase (decrease) (644) (407) (237) (156) (393) 237 (1,231) (1,277) 46

Corporate bonds volume-related increase (decrease) (26) (26) — (46) (46) — (118) (118) — Rate-related increase (decrease) (0) (0) — 2 2 — 2 2 — Net increase (decrease) (27) (27) — (43) (43) — (116) (116) —

Note: Changes due to a combination of volume- and rate-related increases (decreases) have been included in rate-related increase (decrease) .

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Fees and Commissions (Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Domestic International Domestic International Domestic International Total operations operations Total operations operations Total operations operations

Net fees and commissions . . . . 5,038 4,717 321 7,413 6,820 593 12,951 11,507 1,443

Fees and commissions income . . . . . . . . . . . . . . . . 5,541 4,996 545 7,972 7,157 815 13,942 12,105 1,837 Debentures, deposits and loan operations . . . . . . . . 3,710 3,489 220 6,384 6,265 119 10,789 10,354 434 Foreign exchange operations . . . . . . . . . . . . . . 116 93 22 110 83 26 220 166 54 Securities-related operations . . . . . . . . . . . . . . 622 622 — 216 216 — 447 447 — Agency services . . . . . . . . . . . 914 659 255 1,030 430 599 2,101 904 1,197 Safekeeping and safe deposit box services . . . . . . . 0 0 — 0 0 — 6 6 — Gurantee operations . . . . . . . . 90 48 41 100 47 52 202 94 108 Others . . . . . . . . . . . . . . . . . . 86 82 4 130 113 16 173 131 42

Fees and commissions expenses . . . . . . . . . . . . . . 503 279 224 558 336 221 991 597 393 Foreign exchange operations . . . . . . . . . . . . 65 57 7 60 50 10 122 103 19 Others . . . . . . . . . . . . . . . . 437 221 216 497 286 210 868 493 374

Trading Revenues (Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Domestic International Domestic International Domestic International Total operations operations Total operations operations Total operations operations

Net trading revenues . . . . . . . . 5,670 12,058 (6,388) 9,300 (390) 9,691 16,068 (6,280) 22,349

Trading income . . . . . . . . . . . 5,679 12,067 (6,388) 9,300 (390) 9,691 16,107 (6,278) 22,385 Gains on trading securities . . . . . . . . . . . . — — — 0 0 — 0 0 — Gains on securities related to trading transactions . . . — (50) 50 1 34 (32) — — — Gains on trading-related financial derivatives . . . . . 5,679 12,118 (6,439) 9,298 (425) 9,723 16,107 (6,278) 22,385 Others . . . . . . . . . . . . . . . . — — — — — — — — —

Trading expenses . . . . . . . . . 8 8 — — — — 38 2 35 losses on trading securities . . . . . . . . . . . . — — — — — — — — — losses on securities related to trading transactions . . . 8 8 — — — — 38 2 35 losses on trading-related financial derivatives . . . . . — — — — — — — — — Others . . . . . . . . . . . . . . . . — — — — — — — — —

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Other Ordinary Income (Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Domestic International Domestic International Domestic International Total operations operations Total operations operations Total operations operations

Net other ordinary income . . . . 5,976 (83) 6,059 1,705 7,014 (5,309) 342 6,984 (6,642)

Other ordinary income . . . . . 15,613 7,832 7,780 11,970 8,449 3,521 22,710 16,087 6,623 Gains on foreign exchange transactions . . . . . . . . . . . — — — — — — — — — Gains on sales of bonds . . 11,888 5,068 6,820 6,841 2,384 4,457 12,262 5,608 6,653 Gains on redemption of bonds . . . . . . . . . . . . . — — — — — — — — — Gains on derivatives . . . . . — — — 166 1,103 (937) 152 1,288 (1,135) Other . . . . . . . . . . . . . . . . . 3,724 2,763 960 4,962 4,961 1 10,294 9,190 1,104

Other ordinary expenses . . . 9,636 7,915 1,721 10,265 1,434 8,830 22,368 9,102 13,265 loss on foreign exchange transactions . . . 2,355 — 2,355 4,521 — 4,521 4,996 — 4,996 loss on sales of bonds . . . 212 102 110 54 33 20 363 190 173 loss on redemption of bonds . . . . . . . . . . . . . — — — — — — — — — loss on write-off of bonds . . . . . . . . . . . . . . . 4,228 4,060 168 264 — 264 10,583 4,744 5,838 Amortization of debenture and corporate bonds issurance expenses . . . . . 68 68 — 159 159 — 272 272 — loss on derivatives . . . . . . 98 820 (721) — — — — — — Other . . . . . . . . . . . . . . . . . 2,673 2,863 (190) 5,266 1,242 4,024 6,152 3,895 2,256

General and Administrative Expenses (Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . 19,105 21,373 42,677 Salaries and related expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,677 6,121 13,860 Retirement benefit expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 920 1,920 3,644 welfare expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270 292 579 Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 685 671 1,383 Amortization of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . 1,416 2,094 3,173 Rent and lease expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,958 2,041 4,030 Building and maintenance expenses . . . . . . . . . . . . . . . . . . . . . . . 86 70 173 Supplies expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182 173 298 water, lighting and heating expenses . . . . . . . . . . . . . . . . . . . . . . . 286 335 610 travel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180 160 304 Communication expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 371 459 849 Publicity and advertising expenses . . . . . . . . . . . . . . . . . . . . . . . . 243 733 1,446 taxes, other than income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 928 1,075 1,864 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,896 5,222 10,458

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Deposit Operations (Non-Consolidated)

Balance by Deposit Account (Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Domestic International Domestic International Domestic International Total operations operations Total operations operations Total operations operations

Deposits Liquid deposits Average balance 367,763 367,763 — 314,342 314,342 — 311,268 311,268 — (%) (12.67) (12.78) — (11.33) (11.45) — (11.03) (11.13) — Term-end balance 363,761 363,761 — 385,894 385,894 — 369,652 369,652 — (%) (12.70) (12.79) — (13.31) (13.42) — (12.50) (12.61) —

interest-bearing Average balance 342,337 342,337 — 255,918 255,918 — 261,267 261,267 — deposits (%) (11 .80) (11 .90) — (9 .23) (9 .32) — (9 .26) (9 .34) — term-end balance 341,164 341,164 — 319,591 319,591 — 321,087 321,087 — (%) (11 .91) (12 .00) — (11 .02) (11 .11) — (10 .85) (10 .95) —

Time deposits Average balance 2,508,887 2,508,887 — 2,431,108 2,431,108 — 2,483,786 2,483,786 — (in general) (%) (86.45) (87.19) — (87.63) (88.52) — (88.01) (88.84) — Term-end balance 2,477,981 2,477,981 — 2,482,722 2,482,722 — 2,559,355 2,559,355 — (%) (86.52) (87.16) — (85.61) (86.34) — (86.51) (87.30) —

Deregulated Average balance 1,962,701 1,962,701 1,812,930 1,812,930 1,897,514 1,897,514 interest rate (%) (67 .63) (68 .21) (65 .35) (66 .01) (67 .23) (67 .87) time deposits term-end balance 1,962,073 1,962,073 1,882,326 1,882,326 2,019,298 2,019,298 (fixed) (%) (68 .51) (69 .01) (64 .91) (65 .46) (68 .26) (68 .88)

Deregulated Average balance 546,185 546,185 618,177 618,177 586,272 586,272 interest rate (%) (18 .82) (18 .98) (22 .28) (22 .51) (20 .77) (20 .97) time deposits term-end balance 515,907 515,907 600,396 600,396 540,056 540,056 (floating) (%) (18 .01) (18 .15) (20 .70) (20 .88) (18 .26) (18 .42)

Others Average balance 25,384 855 24,528 28,698 970 27,727 27,165 843 26,322 (%) (0.87) (0.03) (100.00) (1.03) (0.04) (100.00) (0.96) (0.03) (100.00) Term-end balance 22,168 1,392 20,776 31,324 6,888 24,435 29,388 2,514 26,874 (%) (0.77) (0.05) (100.00) (1.08) (0.24) (100.00) (0.99) (0.09) (100.00)

Subtotal Average balance 2,902,035 2,877,507 24,528 2,774,148 2,746,421 27,727 2,822,221 2,795,899 26,322 (%) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) Term-end balance 2,863,911 2,843,135 20,776 2,899,941 2,875,505 24,435 2,958,396 2,931,522 26,874 (%) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00)

Negotiable certificates Average balance 136,677 136,677 — 205,765 205,765 — 204,888 204,888 — of deposit Term-end balance 124,310 124,310 — 131,600 131,600 — 141,550 141,550 —

Total Average balance 3,038,713 3,014,185 24,528 2,979,913 2,952,186 27,727 3,027,109 3,000,787 26,322 Term-end balance 2,988,221 2,967,445 20,776 3,031,541 3,007,105 24,435 3,099,946 3,073,072 26,874

Notes: 1 . time deposits (in general) = time deposits Deregulated interest rate time deposits (fixed) = Deregulated interest rate time deposits for which the interest up to the due date is determined

when the deposits are made . Deregulated interest rate time deposits (floating) = Deregulated interest rate time deposits for which the interest varies according to changes in

market interest rates during the period of deposit . 2 . liquidated deposits = Deposits at notice + ordinary deposits + current deposits 3 . Average balance of domestic offices’ foreign currency-denominated transactions in the international operations sector has been computed by the

daily current method .

Balance of Time Deposits by Residual Period (Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Deregulated Deregulated Deregulated Deregulated Deregulated Deregulated interest rate

interest rate

interest rate

interest rate

interest rate

interest rate

Total (fixed) (floating) Total (fixed) (floating) Total (fixed) (floating)

less than 3 months . . . . . . . 299,602 299,552 50 285,805 282,255 3,550 478,795 462,789 16,0053–6 months . . . . . . . . . . . . . . 249,761 248,561 1,200 228,427 219,777 8,650 364,376 349,835 14,5416 months–1 year . . . . . . . . . . 550,272 521,092 29,180 689,984 656,937 33,047 416,198 414,948 1,2501–2 years . . . . . . . . . . . . . . . 456,165 441,040 15,125 258,138 213,508 44,630 352,883 315,518 37,3652–3 years . . . . . . . . . . . . . . . 223,931 195,860 28,070 387,828 319,803 68,024 283,667 262,231 21,436More than 3 years . . . . . . . . . 698,248 255,967 442,281 632,537 190,043 442,494 663,433 213,975 449,458

Total . . . . . . . . . . . . . . . . . . 2,477,981 1,962,073 515,907 2,482,722 1,882,326 600,396 2,559,355 2,019,298 540,056

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Outstanding Balance by Depositor (Millions of yen, %)

Sep. 2010 Sep. 2009 Mar. 2010

Balance Share Balance Share Balance Share

Corporate . . . . . . . . . . . . . . . . . . . . . . . . . 330,820 11 .55 368,633 12 .71 369,836 12 .50Retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,300,379 80 .32 2,176,914 75 .07 2,309,669 78 .08Public sector . . . . . . . . . . . . . . . . . . . . . . . 18,566 0 .65 1,863 0 .06 9,304 0 .31Financial institutions . . . . . . . . . . . . . . . . . 214,144 7 .48 352,529 12 .16 269,585 9 .11

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,863,911 100.00 2,899,941 100.00 2,958,396 100.00

Note: the above balance does not include negotiable certificates of deposits in offshore market accounts .

Deposits per Office (Number of Offices, Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Domestic

Overseas

Domestic

Overseas

Domestic

Overseas

Total offices offices Total offices offices Total offices offices

Number of offices . . . . . . . . . 20 20 — 20 20 — 20 20 —Deposits per office . . . . . . . . 149,411 149,411 — 151,577 151,577 — 154,997 154,997 —

Note: Deposits include negotiable certificates of deposit .

Deposits per Employee (Number of Employees, Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Domestic

Overseas

Domestic

Overseas

Domestic

Overseas

Total offices offices Total offices offices Total offices offices

Number of employees . . . . . . 1,500 1,500 — 1,463 1,463 — 1,479 1,479 —Deposits per employee . . . . . 1,992 1,992 — 2,072 2,072 — 2,095 2,095 —

Notes: 1 . Deposits include negotiable certificates of deposit . 2 . Number of employees represents the average number of employees in each fiscal year . the number of employees in domestic offices includes

head office staff .

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Debenture Operations (Non-Consolidated)

Outstanding and Average Balance of Debentures (Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Term-end Average Term-end Average Term-end Average balance balance balance balance balance balance

Aozora debentures . . . . . . . . . . . . . . . . . . 324,894 406,800 901,217 1,161,544 545,766 943,978

Discounted Aozora debentures . . . . . . . . . 15,484 15,669 17,489 18,003 16,356 17,378

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 340,378 422,470 918,707 1,179,548 562,122 961,357

Note: Debentures do not include debenture subscriptions .

Balance by Residual Period (Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Discounted

Discounted

Discounted

Aozora

Aozora

Aozora

Aozora

Aozora

Aozora

Total debentures debentures Total debentures debentures Total debentures debentures

less than 1 year . . . . . . . . . . 151,776 136,293 15,482 673,927 656,440 17,486 374,951 358,606 16,344 1–3 years . . . . . . . . . . . . . . . 185,802 185,800 1 195,669 195,666 3 164,815 164,803 12 3–5 years . . . . . . . . . . . . . . . 2,800 2,800 49,110 49,110 22,356 22,356 5–7 years . . . . . . . . . . . . . . . — — 0 0 0 0 Over 7 years . . . . . . . . . . . . . — — — — — —

Total . . . . . . . . . . . . . . . . . . 340,378 324,894 15,484 918,707 901,217 17,489 562,122 545,766 16,356

Outstanding Balance of Debentures per Office (Number of Offices, Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Domestic Overseas Domestic Overseas Domestic Overseas Total offices offices Total offices offices Total offices offices

Number of offices . . . . . . . . . 20 20 — 20 20 — 20 20 —Outstanding balance of debentures per office . . . . . 17,018 17,018 — 45,935 45,935 — 28,106 28,106 —

Outstanding Balance of Debentures per Employee (Number of Employees, Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Domestic Overseas Domestic Overseas Domestic Overseas Total offices offices Total offices offices Total offices offices

Number of employees . . . . . . 1,500 1,500 — 1,463 1,463 — 1,479 1,479 —Outstanding balance of debentures per employee . . 226 226 — 627 627 — 380 380 —

Note: Number of employees represents the average number of employees in each fiscal year . the number of employees in domestic offices includes head office staff .

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Balance by Residual Period (Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Fixed Floating Fixed Floating Fixed Floating Total interest interest Total interest interest Total interest interest

less than 1 year . . . . . . . . . . 779,811 933,097 787,214 1–3 years . . . . . . . . . . . . . . . 1,102,175 379,965 722,209 1,013,642 346,245 667,396 1,100,136 363,451 736,684 3–5 years . . . . . . . . . . . . . . . 687,699 195,026 492,673 766,703 218,913 547,789 635,172 206,167 429,004 5–7 years . . . . . . . . . . . . . . . 156,194 36,531 119,662 160,403 53,860 106,542 420,375 51,699 368,676 Over 7 years . . . . . . . . . . . . . 113,888 45,217 68,670 209,347 64,963 144,383 126,027 51,942 74,084 indefinite period . . . . . . . . . . 264 — 264 284 — 284 274 — 274 Total . . . . . . . . . . . . . . . . . . . 2,840,032 3,083,478 3,069,200 Note: No distinction has been made between fixed interest and floating interest for loans with a residual period of less than 1 year .

Ratio of Loans and Bills Discounted to Debentures/Deposits (Millions of yen, %)

Sep. 2010 Sep. 2009 Mar. 2010

Domestic International Domestic International Domestic International Total operations operations Total operations operations Total operations operations

loans and bills discounted (A) . . 2,840,032 2,341,587 498,444 3,083,478 2,681,432 402,046 3,069,200 2,480,660 588,539Debentures and deposits (B) . . . 3,328,600 3,307,824 20,776 3,950,248 3,925,812 24,435 3,662,069 3,635,194 26,874(A)/(B) . . . . . . . . . . . . . . . . . . . . . 85 .32 70 .78 2,399 .13 78 .05 68 .30 1,645 .31 83 .81 68 .24 2,189 .97Average during the year . . . . . . . 85 .03 69 .70 2,232 .32 75 .81 66 .21 1,506 .46 76 .85 67 .13 1,539 .64Notes: 1 Debentures do not include debenture subscriptions . 2 . Deposits include negotiable certificates of deposit .

Loans per Office (Number of Offices, Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Domestic Overseas Domestic Overseas Domestic Overseas

Total offices offices Total offices offices Total offices offices

Number of offices . . . . . . . . . 20 20 — 20 20 — 20 20 —loans per office . . . . . . . . . . 142,001 142,001 — 154,173 154,173 — 153,460 153,460 —

Loans per Employee (Number of Employees, Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Domestic Overseas Domestic Overseas Domestic Overseas

Total offices offices Total offices offices Total offices offices

Number of employees . . . . . 1,500 1,500 — 1,463 1,463 — 1,479 1,479 —loans per employee . . . . . . . 1,893 1,893 — 2,107 2,107 — 2,075 2,075 —Note: Number of employees represents the average number of employees in each fiscal year . the number of employees in domestic offices includes head

office staff .

Loan Operations (Non-Consolidated)

Outstanding Balance of LoansFor the six-month periods ended September 30, 2010 and 2009, and the year ended March 31, 2010

(Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Domestic International Domestic International Domestic International Total operations operations Total operations operations Total operations operations

loans on deeds Average balance 2,769,683 2,222,151 547,531 2,907,813 2,490,149 417,663 2,836,316 2,431,091 405,225 term-end balance 2,628,963 2,130,518 498,444 2,858,677 2,456,630 402,046 2,871,543 2,283,060 588,483 loans on bills Average balance 87,358 87,333 25 136,755 136,719 36 125,155 125,113 41 term-end balance 90,444 90,444 — 114,490 114,490 — 91,984 91,928 55 Overdrafts Average balance 85,356 85,356 — 108,548 108,548 — 102,890 102,890 — term-end balance 120,061 120,061 — 109,383 109,383 — 104,955 104,955 —Bills discounted Average balance 679 679 — 540 540 — 776 776 — term-end balance 562 562 — 927 927 — 716 716 —Total Average balance 2,943,077 2,395,520 547,557 3,153,658 2,735,958 417,700 3,065,139 2,659,872 405,267 Term-end balance 2,840,032 2,341,587 498,444 3,083,478 2,681,432 402,046 3,069,200 2,480,660 588,539

Notes: 1 . the average balance of foreign currency-denominated transactions by domestic offices in international operations has been calculated using the daily current method .

2 . the Bank carries out partial and direct write-off of loans . this also applies to the table shown below .

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Breakdown of Loans and Bills Discounted by Industry (Millions of yen, %)

Sep. 2010 Sep. 2009 Mar. 2010

Balance of loans Share Balance of loans Share Balance of loans Share

Loans by domestic offices (excluding Japan Offshore Market accounts) . . . . . . . . . . . . . . . . . . 2,837,860 100.00 3,080,921 100.00 3,066,835 100.00 Manufacturing . . . . . . . . . . . . . . . . . . . . . 243,082 8 .57 264,418 8 .58 244,158 7 .96 Agriculture, forestry and fisheries . . . . . . . 4,551 0 .16 4,647 0 .15 4,122 0 .13 Mining, quarry, gravel extraction . . . . . . . 4,103 0 .14 5,339 0 .17 4,847 0 .16 Construction . . . . . . . . . . . . . . . . . . . . . . 31,691 1 .12 40,493 1 .31 37,599 1 .23 Electricity, gas, heat supply and water . . . 10,406 0 .37 12,548 0 .41 11,686 0 .38 information and communications . . . . . . 72,760 2 .56 93,331 3 .03 90,189 2 .94 transport, postal service . . . . . . . . . . . . . 158,417 5 .58 173,441 5 .63 167,789 5 .47 wholesale and retail trade . . . . . . . . . . . . 153,548 5 .41 176,945 5 .74 159,031 5 .19 Financial and insurance . . . . . . . . . . . . . . 414,319 14 .60 473,709 15 .38 458,623 14 .96 Real estate . . . . . . . . . . . . . . . . . . . . . . . 907,357 31 .97 936,619 30 .40 924,088 30 .13 leasing . . . . . . . . . . . . . . . . . . . . . . . . . . 98,441 3 .47 137,530 4 .46 123,377 4 .02 Other services . . . . . . . . . . . . . . . . . . . . . 162,499 5 .73 186,149 6 .04 187,884 6 .13 local governments . . . . . . . . . . . . . . . . . 82,318 2 .90 76,224 2 .47 69,988 2 .28 Others . . . . . . . . . . . . . . . . . . . . . . . . . . 494,361 17 .42 499,521 16 .23 583,447 19 .02

Loans by overseas offices (including Japan Offshore Market accounts) . . . . . . . . . . . . . . . . . . 2,172 100.00 2,557 100.00 2,364 100.00 Government . . . . . . . . . . . . . . . . . . . . . . — — — — — — Financial institutions . . . . . . . . . . . . . . . . — — — — — — Others . . . . . . . . . . . . . . . . . . . . . . . . . . 2,172 100 .00 2,557 100 .00 2,364 100 .00

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,840,032 3,083,478 3,069,200 Notes: 1 . Domestic refers to the Bank’s head office and branch offices; overseas refers to the Bank’s overseas branch offices . 2 . For September 30, 2009, the Bank made amendments to some industry categories, due to the November 2007 revision of the Standard industry

Classifications (JSiC) .

Consumer Loans Outstanding (Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Consumer loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,281 14,099 12,724 Housing loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,349 11,108 11,761 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 931 2,990 963Note: Consumer loans outstanding includes personal housing loans, as well as personal loans for general spending purposes and tax payments, and does

not include business loans to sole proprietorships or their owners .

Credits to Major Shareholder Groups (Number of Borrowers, Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

CERBERuS Group (Number of borrowers) 3 3 3 (Credit balance) 9,615 10,939 11,176Total (Number of borrowers) 3 3 3 (Credit balance) 9,615 10,939 11,176Notes: 1 . Figures for credit balance refer to credits extended by Aozora Bank, its subsidiaries and affiliated companies . 2 . Major Shareholder Groups refer to principal shareholders (i .e . those with over 10% of shareholder voting rights of the Bank and its subsidiaries as

well as affiliated companies) . 3 . Credit balance consists of loans, acceptances and guarantees, equity holdings/interest and derivative transactions .

Loan O

peratio

ns (No

n-Co

nsolid

ated)

Loan Operations (Non-Consolidated)

Loans to Small and Medium-Sized Corporations (Number of Borrowers, Millions of yen, %)

Sep. 2010 Sep. 2009 Mar. 2010

Number of Number of Number of borrowers Value borrowers Value borrowers Value

total domestic loans (A) . . . . . . . . . . . . . . . 2,456 2,837,860 2,630 3,080,921 2,563 3,066,835loans to small and medium-sized corporations (B) . . . . . . . . . . . . . . . . . . . . 2,019 1,783,403 2,164 1,679,042 2,119 1,906,454(B)/(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 .20 62 .84 82 .28 54 .49 82 .68 62 .16Notes: 1 . in this table, the balance of loans and bills discounted does not include offshore banking accounts . 2 . Small and medium-sized corporations are defined as companies having capital of not more then ¥300 million (¥100 million in wholesale, and ¥50

million in retail and services business categories), or companies with not more than 300 full-time employees (100 in wholesale, 50 in retail and 100 in services business categories), and individuals .

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Risk-Monitored Loans by Industry (Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Loans by domestic offices (excluding Japan Offshore Market accounts) . . . . . . . . . . . . . . . . 140,501 109,541 169,920 Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,599 1,791 2,934 Agriculture, foresty and fisheries . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — Mining, quarry, gravel extraction . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 530 1,071 910 Electricity, gas, heat supply and water . . . . . . . . . . . . . . . . . . . . . . . — — — information and communications . . . . . . . . . . . . . . . . . . . . . . . . . . 73 191 339 transport, postal service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,087 9,733 4,876 wholesale and retail trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 816 1,118 1,026 Financial and insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,217 27,195 55,956 Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,969 35,069 27,531 leasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 224 111 Other services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,738 19,656 21,552 local governments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,468 13,489 54,681

Loans by overseas offices (including Japan Offshore Market accounts) . . . . . . . . . . . . . . . . . 690 — 760 Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — Financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 690 — 760

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141,191 109,541 170,681

Balance of Loans and Bills Discounted, Classified by Purpose (Millions of yen, %)

Sep. 2010 Sep. 2009 Mar. 2010

Balance of loans Share Balance of loans Share Balance of loans Share

Funds for capital investment . . . . . . . . . . . . 453,129 15 .96 509,172 16 .51 498,263 16 .23Funds for working capital . . . . . . . . . . . . . . 2,386,902 84 .04 2,574,306 83 .49 2,570,937 83 .77

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,840,032 100.00 3,083,478 100.00 3,069,200 100.00

Breakdown of Loans and Bills Discounted by Collateral (Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,877 21,991 22,876 Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,990 19,528 13,521 Merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 373,204 410,650 402,543 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,121 30,689 28,123

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 418,193 482,859 467,064

Guaranteed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,954 144,499 115,131 unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,310,884 2,456,119 2,487,004

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,840,032 3,083,478 3,069,200

Breakdown of Balance of Acceptances and Guarantees (Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Acceptances of bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —letters of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,664 21,755 25,062

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,664 21,755 25,062

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Loan O

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Loan Operations (Non-Consolidated)

Write-Off of Loans (Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

write-off of loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,052 3,755 10,473

Breakdown of Collateral for Customers’ Liabilities for Acceptances and Guarantees (Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,045 1,539 1,131 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 66 489

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,045 1,605 1,621

Guaranteed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 60 52 unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,619 20,089 23,388

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,664 21,755 25,062

Balance at beginning of period Provision

Used for specific purpose Other

Balance at end of

period

Balance at beginning of period Provision

Used for specific purpose Other

Balance at end of

period

Balance at beginning

of year Provision

Used for specific purpose Other

Balance at end of

year

Allowance for Loan LossesFor the six-month periods ended September 30, 2010 and 2009, and the year ended March 31, 2010

(Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Reduction during period Reduction during period Reduction during year

General allowance . . . . . . 65,868 67,925 — 65,868 67,925 85,322 94,171 — 85,322 94,171 85,322 65,868 — 85,322 65,868

Specific allowance . . . . . . (1,281) 49,083 33,195 17,759 31,324 33,195 44,729 29,494 14,021 30,707 29,494 44,729 67,474 26,186 35,651 50,365

Related to non- residents . . . . (1,281) 15,812 16,570 549 15,262 16,570 6,453 3,733 5,383 1,070 3,733 6,453 34,203 11,867 11,695 17,094

Allowance for loans to restructuring countries . . . . . . — — — — — — — — — — — — — — —

Notes: 1 . Figures in parentheses for balance at beginning of period indicate translation difference due to foreign exchange fluctuations . 2 . the provision for the specific allowance for loan losses includes ¥17,109 that was reclassified from the general allowance for loan losses as of

March 31, 2010 . this amount was previously in the general allowance for loan losses in its entirety as provision for asset-backed securities issued by the Bank’s subsidiaries, and was reclassified in accordance with borrower categories for the underlying assets as of March 31, 2010 .

the same applies to the specific allowance related to non-residents as of March 31, 2010 .

Country Risk ReserveNone .

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Disclosed Claims under the Financial Reconstruction Law (Billions of yen)

Sep. 2009 Mar. 2010 Sep. 2010 Change

Disclosed claims under the Financial Reconstruction law Bankrupt and similar credit . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 .1 41 .8 17 .4 (24 .4) Doubtful credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 .2 88 .0 81 .4 (6 .6) Special attention credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 .8 42 .0 43 .0 1 .0

Subtotal (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 .1 171 .8 141 .9 (29 .9) Normal credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,008 .0 2,935 .9 2,741 .4 (194 .6)

Total credit (B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,118.1 3,107.8 2,883.2 (224.5)

(A/B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 .53% 5 .52% 4 .92% (0 .60%)

Reserve Provision Ratios for Each Category of Borrower, Based on Asset-AssessmentsNon-Consolidated (%)

Definition of Borrower Categories Sep. 2009 Mar. 2010 Sep. 2010

Normal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 .9 1 .2 1 .0Need attention: Other need attention borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 .9 4 .1 6 .3 Special attention borrowers (Ratio of reserve to unsecured) . . . . . . . . . . . . . . 58 .1 23 .9 44 .1in danger of bankruptcy (Ratio of reserve to unsecured) . . . . . . . . . . . . . . . . . . 86 .1 82 .0 79 .4De facto bankrupt and bankrupt (Ratio of reserve to unsecured) . . . . . . . . . . . . 100 .0 100 .0 100 .0

Risk-Monitored LoansNon-Consolidated (Billions of yen)

Sep. 2009 Mar. 2010 Sep. 2010

Risk-monitored loans: loans to bankrupt companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 .6 40 .2 15 .6 Past due loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 .9 88 .4 82 .6 loans overdue for three months or more . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — Restructured loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 .1 42 .0 43 .0

Total (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109.5 170.7 141.2

year-end balance of total loans (B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,083 .5 3,069 .2 2,840 .0

(A/B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 .55% 5 .56% 4 .97%

Consolidated (Billions of yen)

Sep. 2009 Mar. 2010 Sep. 2010

Risk-monitored loans: loans to bankrupt companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 .2 40 .2 15 .6 Past due loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 .5 93 .3 89 .5 loans overdue for three months or more . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — Restructured loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 .1 42 .0 43 .0

Total (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135.8 175.6 148.1

year-end balance of total loans (B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,334 .1 3,070 .2 2,831 .8

(A/B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 .07% 5 .71% 5 .23%

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<Definitions of Borrower Categories>Normal Business performance is strong and no special financial

problems exist .

Need attention Borrowers that need to be monitored carefully because of weak business fundamentals, financial problems or problematic lending conditions .

In danger of Borrowers that are not currently bankrupt but are highly bankruptcy likely to become bankrupt .

De facto Borrowers that are substantially bankrupt but are not bankrupt legally or practically bankrupt yet .

Bankrupt Borrowers that are legally or practically bankrupt .

<Definitions of Asset Classifications>Category I Assets that present no particular risk of collectability nor

impairment of value .

Category II Assets, including credits, which bear above-average risk of collectability .

Category III Assets that bear substantial risk of final collectability or impairment of value, and are likely to incur losses .

Category IV Assets deemed to be uncollectable or valueless .

<Write-Off and Reserve Provision Rules>Normal and Based on historical bankruptcy rates, normal status Need attention borrowers, special attention borrowers and other need borrowers attention borrowers are classified and across-the-board

provisions are made to the general allowance for loan-loss .

In danger of For each borrower, the expected recovery amount of bankruptcy category iii assets (non-secured portion) is estimated borrowers and a provision is made to the specific allowance for loan

losses for the amount of shortfall . the expected recovery amount is the discounted present value of the estimated cash flows from future recovery of the loan principal .

De facto in principle, the full amounts of category iii and iv bankrupt and credits are written off directly . Bankrupt borrowers

<Definitions of Disclosed Claims under the Financial Reconstruction Law>Bankrupt and Bankrupt and similar credit refers to the credit of borrowers similar credit who have filed for bankruptcy, corporate reorga nization,

composition, etc ., as well as those borrowers who are in an equivalent situation .

Doubtful credit Doubtful refers to credit with serious doubt concerning the recovery of principal and receiving of interest as contract provisions, because the borrower’s financial condition and business results have worsened, although they have not reached the point of management collapse .

Special attention Special attention refers to loans in arrears for more than credit three months or with mitigated conditions .

Normal credit Normal credit refers to credit to borrowers whose financial condition and business results have no particular problem and which are not categorized in any of the above categories .

<Risk-Monitored Loans>Loans to loans to bankrupt borrowers are loans for which interest bankrupt in arrears has not been accrued because recovery or borrowers settlement of principal or interest is unlikely due to the

prolonged delay in payment of principal or interest (which hereafter shall be called ‘non-accrual loans’) and whose borrowers are legally bankrupt (defined below), excluding the amount of write-offs .

1 . Borrowers that have applied for commencement of company or financial institution reorganization procedures under the provisions of the Corporate Reorganization law .

2 . Borrowers that have applied for reorganization under the provisions of the Civil Reorganization law .

3 . Borrowers that have applied for bankruptcy under the provisions of the Bankruptcy law .

4 . Borrowers that have applied to commence special liquidation under the provisions of the Company law .

5 . Borrowers with reasons equivalent to 1 . to 4 . above as defined by Ministry of Finance ordinances .

6 . Borrowers who have applied for commencement of legal liquidation procedures under overseas laws, corresponding to those listed above .

Past due loans Past due loans refer to non-accrual loans except those for which concessions on payment of interest were made in order to assist the reorganization of bankrupt companies and loans to them .

Loans overdue loans overdue for three months or more refer to those for three loans, excluding loans to bankrupt companies and past months or due loans for which principal or interest remains unpaid more for at least three months .

Restructured Restructured loans refer to those loans, excluding loans loans to bankrupt companies, past due loans and loans overdue

for three months or more for which agreement was made to provide reduction or a moratorium on interest payments, or concessions in the borrower’s favor on interest or principal payments or to waive claims for the purpose of assisting the reconstruction of insolvent borrowers .

<Differences Between Disclosed Claims under the Financial Reconstruction Law and Risk-Monitored Loans>•DisclosedClaims

Disclosure: loans and other claims equivalent thereof (foreign exchange, acceptances and guarantees, suspense payments, as well as loaned securities that require notation [limited to only those subject to a usage and lending or lending agreement], etc .) .

Disclosed: By borrower (by loan for substandard credit)

•Risk-MonitoredLoans

Disclosure: loans only

Disclosed: By loan

Asset-Assessment, Disclosed Claims, Write-Offs, Reserves and Risk-Monitored Loans(After Partial and Direct Write-Offs, Non-Consolidated Basis) as of September 30, 2010

(Billions of Yen)

Borrower categoriesfor self-assessment

Bankrupt borrowers

In danger of bankruptcy borrowers

Normal borrowers

De facto bankrupt borrowers

Disclosed credit under the FRLLoans Other

Doubtful credit81.4

Special attention credit43.0

Normal credit2,741.4

Bankrupt and similar credit17.4

Disclosed claims under the FRL141.9

Total credit 2,883.2

Reserve and coveragefor claims under the FRL

Total reserve 101.1

Collateral/Guarantee coverage 80.6Reserve 37.5

Estimated collections 23.7

Collateral/Guarantee coverage 17.4Reserve —(Partial, direct write-offs of loans) 46.1

Collateral/Guarantee coverage 51.6Reserve 23.7

Estimated collections 6.1

Collateral/Guarantee coverage 11.5Reserve 13.9

Estimated collections 17.6

Reserve and coverageratio

Reserve to unsecuredcredit ratio

100.0%

92.5%

59.1%

100.0%

79.4%

44.1%

Risk-monitored loans

Restructured loans43.0

Risk-monitored loans141.2Reserve and

coverage ratio for disclosed claims

under the FRL83.3%

Reserve ratio for disclosed claims

under the FRL61.2%

Loans overdue for three months or more

—

Past due loans82.6

Loans to bankrupt companies15.6

Need attention borrowers

FRL: Financial Reconstruction LawReserve-to-unsecured credit ratio = Reserve ÷ (Claims – Collateral, guarantees, etc.)Reserve and coverage ratio = (Collateral, guarantees, etc. + Reserve) ÷ Claims

Loan O

peratio

ns (No

n-Co

nsolid

ated)

Loan Operations (Non-Consolidated)

85

Financial and

Co

rpo

rate Data

Loan O

peratio

ns (N

on-C

onso

lidated

)S

ecurities (No

n-Co

nsolid

ated)

(Millions of yen)

Sep. 2009

Japanese national Japanese local Japanese government government corporate Japanese bonds

bonds bonds stocks Others

less than 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 359,945 618 8,001 12,241 1–3 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 237 6,927 125,441 3–5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238,812 1,434 22,321 37,655 5–7 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 46 2,330 201,460 7–10 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105,069 3,744 — 118,289Over 10 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109,148 48 — 50,346 indefinite period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 40,091 166,864

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 812,974 6,129 39,580 40,091 712,300

Outstanding and Average Balance of Securities Held (Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Domestic International Domestic International Domestic International Total operations operations Total operations operations Total operations operations

Total Average balance 1,249,903 912,903 336,999 1,640,428 1,033,996 606,432 1,596,228 994,006 602,222 (%) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) Term-end balance 1,361,167 994,035 367,131 1,611,075 1,002,905 608,170 1,325,045 1,002,725 322,320 (%) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) (100.00)

Japanese national Average balance 676,335 676,335 — 833,475 833,475 — 796,313 796,313 — government (%) (54 .11) (74 .09) — (50 .81) (80 .61) — (49 .89) (80 .11) — bonds term-end balance 735,732 735,732 — 812,974 812,974 — 793,480 793,480 — (%) (54 .05) (74 .01) — (50 .46) (81 .06) — (59 .89) (79 .13) —

Japanese local Average balance 3,364 3,364 — 5,336 5,336 — 5,365 5,365 — government (%) (0 .27) (0 .37) — (0 .32) (0 .51) — (0 .33) (0 .54) — bonds term-end balance 3,703 3,703 — 6,129 6,129 — 5,030 5,030 — (%) (0 .27) (0 .37) — (0 .38) (0 .61) — (0 .38) (0 .50) —

Japanese Average balance 51,188 51,188 — 45,388 45,388 — 42,448 42,448 — corporate (%) (4 .10) (5 .61) — (2 .77) (4 .39) — (2 .66) (4 .27) — bonds term-end balance 57,703 57,703 — 39,580 39,580 — 42,683 42,683 — (%) (4 .24) (5 .80) — (2 .46) (3 .95) — (3 .22) (4 .26) —

Japanese stock Average balance 38,439 38,439 — 41,134 41,134 — 40,087 40,087 — (%) (3 .08) (4 .21) — (2 .51) (3 .98) — (2 .51) (4 .03) — term-end balance 38,377 38,377 — 40,091 40,091 — 38,458 38,458 — (%) (2 .82) (3 .86) — (2 .49) (4 .00) — (2 .90) (3 .84) —

Others Average balance 480,574 143,575 336,999 715,094 108,661 606,432 712,012 109,789 602,222 (%) (38 .44) (15 .72) (100 .00) (43 .59) (10 .51) (100 .00) (44 .61) (11 .05) (100 .00) term-end balance 525,649 158,517 367,131 712,300 104,129 608,170 445,392 123,072 322,320 (%) (38 .62) (15 .96) (100 .00) (44 .21) (10 .38) (100 .00) (33 .61) (12 .27) (100 .00)

Notes: 1 . total for ‘Others’ is the sum of domestic operations and international operations . 2 . the average balance of foreign currency-denominated transactions by domestic offices in international operations has been calculated using the

daily current method .

Balance of Securities by Residual Period (Millions of yen)

Sep. 2010

Japanese national Japanese local Japanese government government corporate Japanese bonds

bonds bonds stocks Others

less than 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299,922 186 2,542 6,5131–3 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 356 14,075 115,213 3–5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151,790 1,630 19,083 37,421 5–7 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,249 — 14,995 33,512 7–10 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194,641 1,481 2,006 35,567 Over 10 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79,130 47 — 61,017 indefinite period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 5,000 38,377 236,404

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 735,732 3,703 57,703 38,377 525,649

Securities (Non-Consolidated)

86

Financial and

Co

rpo

rate Data

Securities

(No

n-Co

nsolid

ated)

Securities/S

ecurities Business (N

on-C

onso

lidated

)

Securities (Non-Consolidated)

Securities Business (Non-Consolidated)

Ratio of Securities to Debentures and Deposits (Millions of yen, %)

Sep. 2010 Sep. 2009 Mar. 2010

Domestic International Domestic International Domestic International Total operations operations Total operations operations Total operations operations

Securities (A) . . . . . . . . . . . . . . 1,361,167 994,035 367,131 1,611,075 1,002,905 608,170 1,325,045 1,002,725 322,320Debentures and deposits (B) . . 3,328,600 3,307,824 20,776 3,950,248 3,925,812 24,435 3,662,069 3,635,194 26,874

Ratio (A)/(B) . . . . . . . . . . . . . . 40 .89 30 .05 1,767 .09 40 .78 25 .54 2,488 .83 36 .18 27 .58 1,199 .36Average during the year . . . . . 36 .11 26 .56 1,373 .90 39 .43 25 .02 2,187 .14 40 .02 25 .08 2,287 .89

Notes: 1 . Debentures do not include debenture subscriptions . 2 . Deposits include negotiable certificates of deposit .

Underwriting of Public Bonds (Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Japanese national government bonds . . . . . . . . . . . . . . . . . . . . . . . . . — — —Japanese local government bonds and government-guaranteed bonds . . — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —

Over-the-Counter Sales of Public Bonds and Securities Investment Trusts (Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Japanese national government bonds . . . . . . . . . . . . . . . . . . . . . . . . . — — —Japanese local government bonds and government-guaranteed bonds . . — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —

Securities investment trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,664 12,208 22,004

Balance of Securities by Residual Period (Millions of yen)

Mar. 2010

Japanese national Japanese local Japanese government government corporate Japanese bonds

bonds bonds stocks Others

less than 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229,962 708 7,870 9,631 1–3 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 318 20,129 110,202 3–5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 319,098 1,765 5,361 26,707 5–7 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 46 4,321 14,894 7–10 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134,892 2,145 — 55,235 Over 10 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109,528 46 — 47,682 indefinate period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 5,000 38,458 181,038

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 793,480 5,030 42,683 38,458 445,392

Average Balance of Securities (Trading Account) (Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Japanese national government bonds (trading account) . . . . . . . . . . . — 0 0 Japanese local government bonds (trading account) . . . . . . . . . . . . . . — — —Japanese government-guranteed bonds (trading account) . . . . . . . . . — — —Other securities (trading account) . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0 0

Note: the Bank has established a trading account .

87

Financial and

Co

rpo

rate Data

International O

peratio

ns (No

n-Co

nsolid

ated)

International Operations (Non-Consolidated)

Foreign Exchange Transactions (Millions of u .S . Dollars)

Sep. 2010 Sep. 2009 Mar. 2010

Outward exchange Foreign bills sold . . . . . . . . . . . . . 1,922 1,800 2,904 Foreign bills bought . . . . . . . . . . . 0 0 0

incoming exchange Foreign bills payable . . . . . . . . . . . 649 633 1,519 Foreign bills receivable . . . . . . . . . — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,571 2,434 4,423

Balance of Assets in International Operations (Millions of yen)

Sep. 2010 Sep. 2009 Mar. 2010

Domestic

Overseas

Domestic

Overseas

Domestic

Overseas

Total offices offices Total offices offices Total offices offices

Balance of assets in international operations . . . . . 1,315,262 1,315,262 — 1,573,930 1,573,930 — 1,362,933 1,362,933 —

88

Financial and

Co

rpo

rate Data

Other O

peratio

ns (No

n-Co

nsolid

ated)

Other Operations (Non-Consolidated)

Principal Fees and Commissions (As of September 30, 2010)

To Other Banks

By Wire

transfers Handled at Clients with On transfers up to ¥210 ¥525 the counter accounts at ¥30,000

the Bank On transfers exceeding ¥420 ¥735 ¥30,000

Clients without On transfers up to ¥210 accounts at ¥30,000

the Bank On transfers exceeding ¥420 ¥1,000

¥30,000

telephone banking On transfer ¥0 ¥300

internet banking On transfer ¥0 ¥150

Collection of For same-site (local) payment Per item ¥210 ¥210payments For different-site (remote) payment Per item ¥420 urgent Normal

¥840 ¥630

Checks and notes Checks cost ¥630 for one book of 50 sheets Notes cost ¥1,050 for one book of 50 sheets

Cashier’s checks ¥525 per check

Document/Card reissuing ¥1,050 to reissue each account book, transaction receipt or certificate ¥1,050 to reissue each card

Balance verification ¥420 per section each timeNotes: 1 . Amounts include 5% consumption tax and regional tax . 2 . the account pre-registered by customers who are registered for telephone banking will be used . 3 . transfers by telegraph are no longer provided as of June 1, 2010 .

To Aozora BankHead Office/

Branches

Automated Installations

As of September 30, 2010

Automated teller machines (AtMs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Domestic Exchange TransactionsFor the six-month periods ended September 30, 2010 and 2009, and the year ended March 31, 2010 (Millions of yen, thousands of transactions)

Sep. 2010 Sep. 2009 Mar. 2010

Value of Number of Value of Number of Value of Number of transactions transactions transactions transactions transactions transactions

Money transfer Sent . . . . . . . . . . . . . . . . . . . . . 1,575,328 603 2,260,983 534 4,337,942 1,101 Received . . . . . . . . . . . . . . . . . . 1,794,340 263 2,354,382 269 4,728,923 531

Money transfer by check Sent . . . . . . . . . . . . . . . . . . . . . 7,161 1 6,676 1 11,950 3 Received . . . . . . . . . . . . . . . . . . 7,199 1 6,982 1 12,390 3

89

Financial and

Co

rpo

rate Data

Other O

peratio

ns (N

on-C

onso

lidated

)C

apitalizatio

n (No

n-Co

nsolid

ated)

(Millions of yen)

Capital Capital

Month/Year increases thereafter

Remarks

Sep . 2000 66,666 419,781 Compensatory private placement (common stock, 333,334 thousand shares); issue price ¥300; transfer to capital ¥200

Oct . 2000 (260,000) 159,781 Non-compensatory reduction of capital • Capitalreductionof¥105,287millionbyredemptionofthe2ndpreferredstock,

102,000 thousand shares; the 3rd preferred stock, 386,398 thousand shares; and the 4th preferred stock, 71,856 thousand shares

• Capitalreductionof¥154,712millionexceedingfaceamountofcommonstockand transferred to capital

Oct . 2000 260,000 419,781 Compensatory private placement (the 5th preferred stock, 866,667 thousand shares); issue price ¥300; transfer to capital ¥300

Capitalization (Non-Consolidated)

History of Capitalization

Major Shareholders(As of September 30, 2010)

a. Common Stock

Number of shares held Percentage of

total outstanding shares

CERBERuS NCB ACQuiSitiON, l .P ., GENERAl PARtNER CERBERuS AOzORA GP l .l .C . . . . . . . . . . 750,659,000 45 .49%

Aozora Bank, ltd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155,892,729 9 .45

ORiX trust and Banking Corporation (trust Account 5200011) . . . . . 149,974,000 9 .09

J .P . MORGAN ClEARiNG CORP-SEC . . . . . . . . . . . . . . . . . . . . . . . 71,773,000 4 .35

the Master trust Bank of Japan, ltd . (trust Account) . . . . . . . . . . . . 32,229,000 1 .95

GOlDMAN, SACHS & CO . REG . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,223,044 1 .23

tHE CHASE MANHAttAN BANK, N .A . lONDON SECS lENDiNG OMNiBuS ACCOuNt . . . . . . . . . . . . . 20,096,996 1 .22

Japan trustee Services Bank, ltd . (trust Account) . . . . . . . . . . . . . . 19,729,000 1 .20

tHE CHASE MANHAttAN BANK 385036 . . . . . . . . . . . . . . . . . . . . 15,945,000 0 .97

tHE BANK OF NEw yORK, NON-tREAty JASDEC ACCOuNt . . . 12,479,566 0 .76

MORGAN StANlEy & CO . iNC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,281,000 0 .56

Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 391,865,017 23 .73

total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,650,147,352 100 .00

Notes: 1 . the chart above was compiled based on the shareholder’s registry as of September 30, 2010 . 2 . the standing proxy of CERBERuS NCB ACQuiSitiON, l .P ., GENERAl PARtNER CERBERuS AOzORA GP l .l .C . submitted a Major Shareholding

Report (Change in shareholding) to the Head of Kanto local Finance Bureau on March 26, 2009 (mandated reporting date: March 19, 2009) . this report stated the number of common shares held by the aforementioned shareholder as 821,469,000 which represented 49 .78% of all shares

issued by the Bank . However, these numbers were different from those on the latest shareholder’s registry, and as such, the Bank was unable to confirm the actual number of shares held by the aforementioned shareholder .

3 . As of November 17, 2008, CERBERuS NCB ACQuiSitiON, l .P ., GENERAl PARtNER CERBERuS AOzORA GP l .l .C . became the Parent Company of the Bank as set out in Regulations Concerning terminology, Forms and Methods of Preparation of Financial Statements, etc . Article 8-3 . this was a result of an increase in the number of shares held by the aforementioned shareholder, as well as a decrease of the total number of voting rights of all shareholders due to the buyback of common shares by the Bank . Also, on the same date, the aforementioned shareholder came under the category of Majority Shareholder under Article 14-7-1-2 of the Order for Enforcement of the Financial instruments and Exchange Act and the Bank and the aforementioned shareholder became Joint Holders under the Financial instruments and Exchange Act, Article 27-23-6 .

90

Financial and

Co

rpo

rate Data

Cap

italization (N

on-C

onso

lidated

)

Capitalization (Non-Consolidated)

Ownership and Distribution of Shares(As of September 30, 2010)

b. Class A Series 4 Preferred Stock Stock Status (1 tangen unit = 1,000 shares)

National Foreign investors Fractional and Financial Other shares of municipal Financial instruments domestic Other than Individuals common Classification governments institutions firms companies individuals Individuals and others Total stock

Number of shareholders . . . — — — 1 — — — 1 —Number of shares held (tangen) . . . . . . . . . . . . . . — — — 24,072 — — — 24,072 —Percentage of total number of shares . . . . . . . — — — 100 .00 — — — 100 .00 —

c. Class C Series 5 Preferred Stock Stock Status (1 tangen unit = 1,000 shares)

National Foreign investors Fractional and Financial Other shares of municipal Financial instruments domestic Other than Individuals common Classification governments institutions firms companies individuals Individuals and others Total stock

Number of shareholders . . . — 1 — — — — — 1 —Number of shares held (tangen) . . . . . . . . . . . . . . — 258,799 — — — — — 258,799 500Percentage of total number of shares . . . . . . . — 100 .00 — — — — — 100 .00 —

c. Class C Series 5 Preferred Stock

Number of shares held Percentage of

total outstanding shares

the Resolution and Collection Corporation . . . . . . . . . . . . . . . . . . . 258,799,500 100 .00%

b. Class A Series 4 Preferred Stock

Number of shares held Percentage of

total outstanding shares

Deposit insurance Corporation of Japan . . . . . . . . . . . . . . . . . . . . . 24,072,000 100 .00%

a. Common Stock Stock Status (1 tangen unit = 1,000 shares)

National Foreign investors Fractional and Financial Other shares of municipal Financial instruments domestic Other than Individuals common Classification governments institutions firms companies individuals Individuals and others Total stock

Number of shareholders . . . 1 72 32 793 301 27 36,504 37,730 —Number of shares held (tangen) . . . . . . . . . . . . . . 150 289,744 4,276 18,725 1,059,160 1,063 276,974 1,650,092 55,352Percentage of total number of shares . . . . . . . 0 .01 17 .56 0 .26 1 .13 64 .19 0 .06 16 .79 100 .00 —Notes: 1 . treasury stock of 155,892,729 shares comprises 155,892 tangen units under individuals and others and 729 shares under ‘Fractional shares of

common stock .’ 2 . in the ‘Other domestic companies’ column, shares in the name of Japan Securities Depository Center, inc ., represent one tangen unit .

91

Financial and

Co

rpo

rate Data

Disclo

sure Based

on B

asel II C

apital A

ccord

Pillar III—

Market D

iscipline

Disclosure Based on Basel II Capital Accord Pillar III—Market Discipline

Quantitative Disclosure

1. Names and aggregate capital for unconsolidated subsidiaries that are deducted from consolidated regulatory capital and have less than the compulsory amount of capital

None of the unconsolidated subsidiaries where investment from the Bank or consolidated subsidiaries are deducted from consolidated regulatory capital is assigned compulsory capital requirements for end-September 2009 and end-September 2010 .

2. Items pertaining to capital structuresthese items are described in the Consolidated Financial Review: Consolidated Capital Adequacy Ratio (Domestic Standard), and the Non-Consolidated Business Results: Non-Consolidated Capital Adequacy Ratio (Domestic Standard) .

3. Items pertaining to capital adequacy

this section describes the information consistent with FSA Notification Number 15, Basel ii Pillar iii—Market Discipline, based on Article 19-2 .1 .5 .d and 19-3 .1 .3 .c of the Bank law Enforcement Rule issued on March 23, 2007 . ‘Notification’ in this section refers to FSA Notification Number 19, Basel ii Pillar i—Required Capital, issued on March 27, 2006 .

(1) Breakdown by Portfolios (Non-Consolidated) (100 Million yen)

Sep. 2009 Sep. 2010

Amount of Amount of Amount of Amount of Amount of credit capital Amount of credit capital Category exposure risk assets requirements exposure risk assets requirements

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168 — — 139 — —Claims on Japanese government/bank . . . . . . . . . . . . . . . . . . . . . . . . 13,454 — — 10,580 — —Claims on foreign central government/bank . . . . . . . . . . . . . . . . . . . . . 1,430 2 0 2,027 2 0 Claims on Bank of international Settlement (BiS) . . . . . . . . . . . . . . . . . — — — — — —Claims on Japanese local public bodies . . . . . . . . . . . . . . . . . . . . . . . 829 7 0 866 7 0 Claims on non-central government public sector entities (PSEs) of foreign countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262 52 2 289 58 2 Claims on multilateral development banks (MDBs) . . . . . . . . . . . . . . . . — — — — — —Claims on Japan Finance Organization for Municipalities (JFM) . . . . . . . . — — — 9 0 0 Claims on organs affiliated with the Japanese government . . . . . . . . . 685 72 3 1,019 185 7 Claims on three major local public corporations . . . . . . . . . . . . . . . . . . 260 4 0 301 4 0 Claims on financial institutions and type i financial instruments business operators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,516 1,396 56 5,735 1,481 59 Claims on corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,765 16,975 679 18,414 14,740 590 Claims on SMEs and individuals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — —Mortgage-backed housing loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 12 0 26 9 0 Claims on projects including acquisition of real estate properties . . . . . 2,060 2,026 81 1,894 1,888 76 loans past due for three months or more . . . . . . . . . . . . . . . . . . . . . . 1,842 1,453 58 1,251 1,215 49 Cash items in process of collection . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 — — — — —loans guaranteed by Credit Guarantee Association etc . . . . . . . . . . . . 2 0 0 2 0 0 loans guaranteed by Enterprise turnaround initiative Corporation of Japan (EtiC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — —Equity etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 883 768 31 680 672 27 Securitization (as originating bank) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 12 0 20 0 0 Rating-based approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 8 0 17 — — look-through approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 4 0 3 0 0 Capital deduction (as transitional arrangement under Article 15 of Supplementary Provision) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Capital deduction (other) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 — — 0 — —Securitization (not as originating bank) . . . . . . . . . . . . . . . . . . . . . . . . . 6,908 6,005 240 6,506 5,925 237 Rating-based approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,679 926 37 1,193 612 24 look-through approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,829 5,079 203 5,073 5,313 213 Capital deduction (as transitional arrangement under Article 15 of Supplementary Provision) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 — — 38 — — Capital deduction (other) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276 — — 202 — —Fund (look-through approach) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,171 4,766 191 3,936 3,632 145 Risk weight 0% to 20% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 0 0 500 63 3 Risk weight > 20% <= 50% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2 0 311 68 3 Risk weight > 50% <= 100% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 392 316 13 322 276 11 Risk weight > 100% <= 150% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,548 4,181 167 2,586 3,001 120 Risk weight > 150% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 267 11 126 224 9 Capital deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 — — 91 — —Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 783 782 31 704 704 28 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,090 34,332 1,373 54,400 30,523 1,221

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(2) Amount of capital required to cover credit risk related to exposures for which credit risk assets are deemed applicable:

this topic has already been addressed in Quantitative Disclosure 3 . (1) .

Breakdown by Portfolios (Consolidated) (100 Million yen)

Sep. 2009 Sep. 2010

Amount of Amount of Amount of Amount of Amount of credit capital Amount of credit capital Category exposure risk assets requirements exposure risk assets requirements

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168 — — 139 — —Claims on Japanese government/bank . . . . . . . . . . . . . . . . . . . . . . . . 13,455 — — 10,583 — —Claims on foreign central government/bank . . . . . . . . . . . . . . . . . . . . . 1,430 2 0 2,027 2 0 Claims on Bank of international Settlement (BiS) . . . . . . . . . . . . . . . . . — — — — — —Claims on Japanese local public bodies . . . . . . . . . . . . . . . . . . . . . . . 829 7 0 866 7 0 Claims on non-central government public sector entities (PSEs) of foreign countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262 52 2 289 58 2 Claims on multilateral development banks (MDBs) . . . . . . . . . . . . . . . . — — — — — —Claims on Japan Finance Organization for Municipalities (JFM) . . . . . . . . — — — 9 0 0 Claims on organs affiliated with the Japanese government . . . . . . . . . 685 72 3 1,019 185 7 Claims on three major local public corporations . . . . . . . . . . . . . . . . . . 260 4 0 301 4 0 Claims on financial institutions and type i financial instruments business operators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,514 1,395 56 5,670 1,468 59 Claims on corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,339 18,548 742 19,446 15,772 631 Claims on SMEs and individuals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — —Mortgage-backed housing loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 12 0 26 9 0 Claims on projects including acquisition of real estate properties . . . . . 2,060 2,026 81 1,894 1,888 76 loans past due for three months or more . . . . . . . . . . . . . . . . . . . . . . 3,497 3,694 148 2,607 2,996 120 Cash items in process of collection . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — —loans guaranteed by Credit Guarantee Association etc . . . . . . . . . . . . 2 0 0 2 0 0 loans guaranteed by Enterprise turnaround initiative Corporation of Japan (EtiC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — —Equity etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 640 527 21 511 509 20 Securitization (as originating bank) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 12 0 17 — — Rating-based approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 8 0 17 — — look-through approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 4 0 — — — Capital deduction (as transitional arrangement under Article 15 of Supplementary Provision) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — Capital deduction (other) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 — — 0 — —Securitization (not as originating bank) . . . . . . . . . . . . . . . . . . . . . . . . . 6,926 6,023 241 6,523 5,942 238 Rating-based approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,679 926 37 1,193 612 24 look-through approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,847 5,097 204 5,090 5,330 213 Capital deduction (as transitional arrangement under Article 15 of Supplementary Provision) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 — — 38 — — Capital deduction (other) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276 — — 202 — —Fund (look-through approach) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 736 785 31 1,360 687 27 Risk weight 0% to 20% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 0 500 63 3 Risk weight > 20% <= 50% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2 0 308 68 3 Risk weight > 50% <= 100% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271 227 9 160 137 5 Risk weight > 100% <= 150% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245 303 12 208 247 10 Risk weight > 150% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 253 10 93 172 7 Capital deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 — — 91 — —Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 928 927 37 840 839 34 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,805 34,087 1,363 54,132 30,367 1,215 Notes:1.AmountofExposure •Afterdeductingtheamountequivalenttopartialdirectwrite-offs(beforeapplyingcreditriskmitigationeffect). Specific allowance for loan-losses and allowance for loans to restructuring countries are not subject to the

deduction . •TheamountisequivalenttocreditextensionsetforthintheNotification(aftertheeffectofdeductingthe

amount equivalent to credit extension under the close-out netting agreement) . 2.AmountofCreditRisk •Afterapplyingcreditriskmitigationeffect. 3.AmountofCapitalRequirements •AsthestandardapproachanddomesticstandardareadoptedbyAozoraBank,theamountiscalculated

taking 4% of credit risk assets .

Notes:1.AmountofExposure •Afterdeductingtheamountequivalenttopartialdirectwrite-offs(beforeapplyingcreditriskmitigationeffect). Specific allowance for loan-losses and allowance for loans to restructuring countries are not subject to the

deduction . •TheamountisequivalenttocreditextensionsetforthintheNotification(aftertheeffectofdeductingthe

amount equivalent to credit extension under the close-out netting agreement) . 2.AmountofCreditRisk •Afterapplyingcreditriskmitigationeffect. 3.AmountofCapitalRequirements •AsthestandardapproachanddomesticstandardareadoptedbyAozoraBank,theamountiscalculated

taking 4% of credit risk assets . 4. IndicationMethodafter •Theamountisroundedtothenearestwholenumber.Thesameappliestothefollowingcharts. the Decimal Point

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(3) Amount of capital required to cover market risk and amounts presented by each method used by the consolidated Group:

Breakdown of Exposure by Area (Non-Consolidated) (100 Million yen)

Sep. 2009 Sep. 2010

OTC OTC Area Loans etc. Securities derivatives Total Loans etc. Securities derivatives Total

Japan . . . . . . . . . . . . . . . . . . . . . . 36,386 10,057 2,586 49,029 31,531 9,983 1,938 43,452 Overseas . . . . . . . . . . . . . . . . . . . 4,581 6,076 1,404 12,061 5,807 3,644 1,496 10,948

Total . . . . . . . . . . . . . . . . . . . . . . . 40,967 16,133 3,990 61,090 37,338 13,627 3,435 54,400

Notes: 1 . loans etc . include on-balance and off-balance sheet exposures such as loans and commitment lines, other than securities and OtC derivatives above .

2 . Disclosure of the average balance is not made because there is no significant difference between the average risk position of the exposure for the term and the balance at the term-end .

Breakdown of Exposure by Area (Consolidated) (100 Million yen)

Sep. 2009 Sep. 2010

OTC OTC Area Loans etc. Securities derivatives Total Loans etc. Securities derivatives Total

Japan . . . . . . . . . . . . . . . . . . . . . . 36,987 9,173 2,586 48,746 32,034 9,180 1,938 43,152 Overseas . . . . . . . . . . . . . . . . . . . 7,317 3,338 1,404 12,059 5,893 3,589 1,496 10,979

Total . . . . . . . . . . . . . . . . . . . . . . . 44,303 12,511 3,990 60,805 37,927 12,770 3,435 54,132

Notes: 1 . loans etc . include on-balance and off-balance sheet exposures such as loans and commitment lines, other than securities and OtC derivatives above .

2 . Disclosure of the average balance is not made because there is no significant difference between the average risk position of the exposure for the term and the balance at the term-end .

(Millions of yen)

Sep. 2009 Sep. 2010

Consolidated Non-consolidated Consolidated Non-consolidated

Standardized approach . . . . . . . . . 4,768 4,449 3,051 2,781 interest rate risk . . . . . . . . . . . . . 3,229 3,115 2,180 2,097 Equity risk . . . . . . . . . . . . . . . . . 0 0 1 1 Foreign exchange risk . . . . . . . . 246 41 193 6 Commodities risk . . . . . . . . . . . . 3 3 0 0 Options transactions . . . . . . . . . 1,288 1,288 675 675

internal model approach . . . . . . . . 3,193 3,193 1,465 1,465

Total . . . . . . . . . . . . . . . . . . . . . . 7,961 7,643 4,517 4,247

Note: the calculation methods are as follows: 1 . internal Model Approach General market risk for the linear risk portion of interest rates, foreign exchange (major currencies), equity and CDS trading . 2 . Standardized Approach General market risk is not applicable to the internal model and specific risk for CDS trading, etc .

(4) Amount of capital required to cover operational risk and amounts presented by each method:this information is described in the Consolidated Financial Review: Consolidated Capital Adequacy Ratio (Domestic Standard),

and the Non-Consolidated Business Results: Non-Consolidated Capital Adequacy Ratio (Domestic Standard) .

(5) Capital adequacy ratio and Tier I ratio:these ratios are described in the Consolidated Financial Review: Consolidated Capital Adequacy Ratio (Domestic Standard), and the Non-Consolidated Business Results: Non-Consolidated Capital Adequacy Ratio (Domestic Standard) .

(6) Total capital requirements:the aggregate amount is described in the Consolidated Financial Review: Consolidated Capital Adequacy Ratio (Domestic Standard), and the Non-Consolidated Business Results: Non-Consolidated Capital Adequacy Ratio (Domestic Standard) .

4. Items pertaining to credit risk(1) Breakdown of term-end credit risk exposure balance by area, industry and residual period, as well as category:

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Breakdown of Exposure by Industry Sector (Non-Consolidated) (100 Million yen)

Sep. 2009 Sep. 2010

OTC OTC Industry sector Loans etc. Securities derivatives Total Loans etc. Securities derivatives Total

Sovereign . . . . . . . . . . . . . . . . . . . 7,220 9,883 13 17,115 5,352 9,728 13 15,093 Financial institution . . . . . . . . . . . . 3,406 702 1,781 5,889 3,732 371 1,843 5,946 Manufacturer . . . . . . . . . . . . . . . . 3,383 87 668 4,138 2,972 82 647 3,700 Agriculture/forestry/fisheries . . . . . 49 — 6 54 46 — 6 52 Mining . . . . . . . . . . . . . . . . . . . . . 70 — — 70 48 — — 48 Construction . . . . . . . . . . . . . . . . . 443 — 78 521 335 — 78 413 utilities (electric power/gas/ heat supply/water service) . . . . . . 213 — 54 267 204 — 54 258 information & telecommunication . . . 1,411 276 3 1,690 1,009 267 3 1,279 transport . . . . . . . . . . . . . . . . . . . 2,392 19 28 2,439 2,036 10 24 2,070 wholesale/retail . . . . . . . . . . . . . . . 1,975 25 384 2,384 1,804 24 337 2,165 Other financial business (moneylending, leasing) . . . . . . . . 7,525 4,320 828 12,673 7,913 2,265 285 10,463 Real estate . . . . . . . . . . . . . . . . . . 9,458 754 57 10,270 9,004 847 50 9,901 various services (excluding leasing) . . . . . . . . . . . . 2,016 68 11 2,096 1,653 33 11 1,698 Others . . . . . . . . . . . . . . . . . . . . . 1,405 — 78 1,483 1,231 — 82 1,313

Total . . . . . . . . . . . . . . . . . . . . . . . 40,967 16,133 3,990 61,090 37,338 13,627 3,435 54,400

Notes: 1 . loans etc . include on-balance and off-balance sheet exposures such as loans and commitment lines, other than securities and OtC derivatives above .

2 . the category Sovereign includes the exposures to sovereign as stipulated in the Notification . the same applies to the following charts . 3 . the category Financial institution includes exposures to financial institutions as stipulated in the Notification . the same applies to the following charts .

Breakdown of Exposure by Industry Sector (Consolidated) (100 Million yen)

Sep. 2009 Sep. 2010

OTC OTC Industry sector Loans etc. Securities derivatives Total Loans etc. Securities derivatives Total

Sovereign . . . . . . . . . . . . . . . . . . . 7,220 9,884 13 17,117 5,352 9,731 13 15,096 Financial institution . . . . . . . . . . . . 3,350 648 1,781 5,779 3,613 317 1,843 5,773 Manufacturer . . . . . . . . . . . . . . . . 4,270 87 668 5,025 3,567 82 647 4,295 Agriculture/forestry/fisheries . . . . . 62 — 6 68 58 — 6 65 Mining . . . . . . . . . . . . . . . . . . . . . 91 — — 91 58 — — 58 Construction . . . . . . . . . . . . . . . . . 490 1 78 569 339 1 78 418 utilities (electric power/gas/ heat supply/water service) . . . . . . 263 — 54 317 242 — 54 296 information & telecommunication . . . 2,333 276 3 2,612 1,629 267 3 1,900 transport . . . . . . . . . . . . . . . . . . . 2,463 19 28 2,511 2,082 10 24 2,116 wholesale/retail . . . . . . . . . . . . . . . 2,152 25 384 2,561 1,928 24 337 2,289 Other financial business (moneylending, leasing) . . . . . . . . 7,176 737 828 8,741 5,836 1,371 285 7,492 Real estate . . . . . . . . . . . . . . . . . . 9,519 754 57 10,330 9,048 847 50 9,945 various services (excluding leasing) . . . . . . . . . . . . 2,708 68 11 2,788 2,186 33 11 2,231 Others . . . . . . . . . . . . . . . . . . . . . 2,205 13 78 2,297 1,988 88 82 2,158

Total . . . . . . . . . . . . . . . . . . . . . . . 44,303 12,511 3,990 60,805 37,927 12,770 3,435 54,132

Note: loans etc . include on-balance and off-balance sheet exposures such as loans and commitment lines, other than securities and OtC derivatives above .

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Breakdown of Exposure by Remaining Period (Non-Consolidated) (100 Million yen)

Sep. 2009 Sep. 2010

OTC OTC Remaining Period Loans etc. Securities derivatives Total Loans etc. Securities derivatives Total

< 1 year . . . . . . . . . . . . . . . . . . . . 9,395 3,794 574 13,763 8,912 3,066 1,110 13,088

=> 1 year < 5 years . . . . . . . . . . . . . 18,424 4,339 1,846 24,609 17,596 3,385 635 21,615

=> 5 years . . . . . . . . . . . . . . . . . . . 13,148 8,000 1,570 22,718 10,830 7,176 1,690 19,697

Total . . . . . . . . . . . . . . . . . . . . . . 40,967 16,133 3,990 61,090 37,338 13,627 3,435 54,400

Notes: 1 . loans etc . include on-balance and off-balance sheet exposures such as loans and commitment lines, other than securities and OtC derivatives above .

2 . Exposures with remaining period => 5 years also include the transactions for which no maturity period is stipulated .

Breakdown of Exposure by Remaining Period (Consolidated) (100 Million yen)

Sep. 2009 Sep. 2010

OTC OTC Remaining Period Loans etc. Securities derivatives Total Loans etc. Securities derivatives Total

< 1 year . . . . . . . . . . . . . . . . . . . . 8,886 3,794 574 13,254 8,393 3,066 1,110 12,569

=> 1 year < 5 years . . . . . . . . . . . . . 18,394 4,339 1,846 24,579 15,785 3,385 635 19,804

=> 5 years . . . . . . . . . . . . . . . . . . . 17,024 4,378 1,570 22,972 13,749 6,319 1,690 21,758

Total . . . . . . . . . . . . . . . . . . . . . . 44,303 12,511 3,990 60,805 37,927 12,770 3,435 54,132

Notes: 1 . loans etc . include on-balance and off-balance sheet exposures such as loans and commitment lines, other than securities and OtC derivatives above .

2 . Exposures with remaining period => 5 years also include the transactions for which no maturity period is stipulated .

(2) Balance of term-end exposures on loans overdue three months or more and breakdown by area and industry:

Breakdown of Exposure Overdue for Three Months or More by Area (Non-Consolidated) (100 Million yen)

Sep. 2009 Sep. 2010

OTC OTC Area Loans etc. Securities derivatives Total Loans etc. Securities derivatives Total

Japan . . . . . . . . . . . . . . . . . . . . . . 1,574 0 30 1,603 784 0 214 998 Overseas . . . . . . . . . . . . . . . . . . . 148 90 — 239 253 0 — 253

Total . . . . . . . . . . . . . . . . . . . . . . 1,722 90 30 1,842 1,037 0 214 1,251

Note: loans etc . include on-balance and off-balance sheet exposures such as loans and commitment lines, other than securities and OtC derivatives above .

Breakdown of Exposure Overdue for Three Months or More by Area (Consolidated) (100 Million yen)

Sep. 2009 Sep. 2010

OTC OTC Area Loans etc. Securities derivatives Total Loans etc. Securities derivatives Total

Japan . . . . . . . . . . . . . . . . . . . . . . 2,230 0 30 2,260 1,409 0 214 1,622 Overseas . . . . . . . . . . . . . . . . . . . 1,147 90 — 1,237 984 0 — 984

Total . . . . . . . . . . . . . . . . . . . . . . 3,377 90 30 3,497 2,393 0 214 2,607

Note: loans etc . include on-balance and off-balance sheet exposures such as loans and commitment lines, other than securities and OtC derivatives above .

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Breakdown of Exposure Overdue for Three Months or More by Industry Sector (Non-Consolidated) (100 Million yen)

Sep. 2009 Sep. 2010

OTC OTC Industry sector Loans etc. Securities derivatives Total Loans etc. Securities derivatives Total

Sovereign . . . . . . . . . . . . . . . . . . . — — — — — — — —Financial institution . . . . . . . . . . . . 253 — — 253 91 — — 91 Manufacturer . . . . . . . . . . . . . . . . 4 0 0 5 16 0 0 16 Agriculture/forestry/fisheries . . . . . — — — — — — — —Mining . . . . . . . . . . . . . . . . . . . . . — — — — — — — —Construction . . . . . . . . . . . . . . . . . 27 — — 27 26 — — 26 utilities (electric power/gas/ heat supply/water service) . . . . . . — — — — — — — —information & telecommunication . . . 16 0 0 16 — 0 — 0 transport . . . . . . . . . . . . . . . . . . . 227 — — 227 208 — — 208 wholesale/retail . . . . . . . . . . . . . . . 11 0 20 31 8 0 25 33 Other financial business (moneylending, leasing) . . . . . . . . 555 — 10 565 357 0 188 544 Real estate . . . . . . . . . . . . . . . . . . 421 90 0 512 278 — 0 278 various services (excluding leasing) . . . . . . . . . . . . 202 0 0 202 49 0 1 50 Others . . . . . . . . . . . . . . . . . . . . . 5 — — 5 4 — — 4

Total . . . . . . . . . . . . . . . . . . . . . . . 1,722 90 30 1,842 1,037 0 214 1,251

Note: loans etc . include on-balance and off-balance sheet exposures such as loans and commitment lines, other than securities and OtC derivatives above .

Breakdown of Exposure Overdue for Three Months or More by Industry Sector (Consolidated) (100 Million yen)

Sep. 2009 Sep. 2010

OTC OTC Industry sector Loans etc. Securities derivatives Total Loans etc. Securities derivatives Total

Sovereign . . . . . . . . . . . . . . . . . . . — — — — — — — —Financial institution . . . . . . . . . . . . 253 — — 253 91 — — 91 Manufacturer . . . . . . . . . . . . . . . . 256 0 0 257 138 0 0 138 Agriculture/forestry/fisheries . . . . . — — — — — — — —Mining . . . . . . . . . . . . . . . . . . . . . 5 — — 5 — — — —Construction . . . . . . . . . . . . . . . . . 27 — — 27 26 — — 26 utilities (electric power/gas/ heat supply/water service) . . . . . . 4 — — 4 4 — — 4 information & telecommunication . . . 283 0 0 283 230 0 — 230 transport . . . . . . . . . . . . . . . . . . . 249 — — 249 217 — — 217 wholesale/retail . . . . . . . . . . . . . . . 73 0 20 93 57 0 25 82 Other financial business (moneylending, leasing) . . . . . . . . 637 — 10 647 420 0 188 607 Real estate . . . . . . . . . . . . . . . . . . 431 90 0 521 295 — 0 295 various services (excluding leasing) . . . . . . . . . . . . 496 0 0 496 288 0 1 289 Others . . . . . . . . . . . . . . . . . . . . . 662 — — 662 628 — — 628

Total . . . . . . . . . . . . . . . . . . . . . . . 3,377 90 30 3,497 2,393 0 214 2,607

Note: loans etc . include on-balance and off-balance sheet exposures such as loans and commitment lines, other than securities and OtC derivatives above .

97

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Pillar III—

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iscipline

Mar. 2010

Allowance for loans to Area General allowance Specific allowance restructuring countries Total

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 333 — 333 Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 171 — 171

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 659 504 — 1,162

Sep. 2009

Allowance for loans to Area General allowance Specific allowance restructuring countries Total

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 258 — 258 Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 37 — 37

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 942 295 — 1,237

Allowance (difference) (Sep. 2010–Mar. 2010)

Allowance for loans to Area General allowance Specific allowance restructuring countries Total

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (173) — (173) Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1 — 1

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 (172) — (151)

Allowance (difference) (Mar. 2010–Sep. 2009)

Allowance for loans to Area General allowance Specific allowance restructuring countries Total

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 75 — 75Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 134 — 134

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (283) 209 — (74)

(3) Term-end balances and year-on-year changes for general allowance for loan losses, specific loan allowance and country risk allowance:

Breakdown of Allowance by Area (Non-Consolidated) (100 Million yen)

Sep. 2010

Allowance for loans to Area General allowance Specific allowance restructuring countries Total

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 160 — 160 Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 172 — 172

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 679 332 — 1,011

Breakdown of Allowance by Area (Consolidated) (100 Million yen)

Sep. 2010

Allowance for loans to Area General allowance Specific allowance restructuring countries Total

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 160 — 160Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 208 — 208

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 680 368 — 1,048

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Financial and

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apital A

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Pillar III—

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iscipline

Disclosure Based on Basel II Capital Accord Pillar III—Market Discipline

Mar. 2010

Allowance for loans to Area General allowance Specific allowance restructuring countries Total

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 333 — 333Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 194 — 194

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 663 526 — 1,189

Sep. 2009

Allowance for loans to Area General allowance Specific allowance restructuring countries Total

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 258 — 258Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 49 — 49

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 862 306 — 1,168

Allowance (difference) (Sep. 2010–Mar. 2010)

Allowance for loans to Area General allowance Specific allowance restructuring countries Total

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (173) — (173) Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 14 — 14

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 (159) — (142)

Allowance (difference) (Mar. 2010–Sep. 2009)

Allowance for loans to Area General allowance Specific allowance restructuring countries Total

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 75 — 75Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 145 — 145

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (199) 220 — 21

Breakdown of Allowance by Industry Sector (Non-Consolidated) (100 Million yen)

Sep. 2010

Allowance for loans to Industry sector General allowance Specific allowance restructuring countries Total

Sovereign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 94 — 94Financial institution . . . . . . . . . . . . . . . . . . . . . . . — — — —Manufacturer . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1 — 1Agriculture/forestry/fisheries . . . . . . . . . . . . . . . . — — — —Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — —Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — —utilities (electric power/gas/heat supply/ water service) . . . . . . . . . . . . . . . . . . . . . . . . . . — — — —information & telecommunication . . . . . . . . . . . . — 14 — 14transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 94 — 94wholesale/retail . . . . . . . . . . . . . . . . . . . . . . . . . . — 7 — 7 Other financial business (moneylending, leasing) . . . — 71 — 71Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1 — 1 various services (excluding leasing) . . . . . . . . . . . — 50 — 50 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0 — 0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 679 332 — 1,011

99

Financial and

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on B

asel II C

apital A

ccord

Pillar III—

Market D

iscipline

Allowance (difference) (Sep. 2010–Mar. 2010)

Allowance for loans to Industry sector General allowance Specific allowance restructuring countries Total

Sovereign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 5 — 5 Financial institution . . . . . . . . . . . . . . . . . . . . . . . — — — —Manufacturer . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1 — 1Agriculture/forestry/fisheries . . . . . . . . . . . . . . . . — — — —Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — —Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — —utilities (electric power/gas/heat supply/ water service) . . . . . . . . . . . . . . . . . . . . . . . . . . — — — —information & telecommunication . . . . . . . . . . . . — 14 — 14transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 27 — 27 wholesale/retail . . . . . . . . . . . . . . . . . . . . . . . . . . — 0 — 0Other financial business (moneylending, leasing) . . . — (184) — (184) Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (42) — (42)various services (excluding leasing) . . . . . . . . . . . — 7 — 7Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0 — 0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 (172) — (151)

Mar. 2010

Allowance for loans to Industry sector General allowance Specific allowance restructuring countries Total

Sovereign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 89 — 89 Financial institution . . . . . . . . . . . . . . . . . . . . . . . — — — —Manufacturer . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — —Agriculture/forestry/fisheries . . . . . . . . . . . . . . . . — — — —Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — —Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — utilities (electric power/gas/heat supply/ water service) . . . . . . . . . . . . . . . . . . . . . . . . . . — — — —information & telecommunication . . . . . . . . . . . . — — — —transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 66 — 66 wholesale/retail . . . . . . . . . . . . . . . . . . . . . . . . . . — 7 — 7 Other financial business (moneylending, leasing) . . . — 255 — 255 Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 43 — 43 various services (excluding leasing) . . . . . . . . . . . — 43 — 43Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0 — 0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 659 504 — 1,162

Sep. 2009

Allowance for loans to Industry sector General allowance Specific allowance restructuring countries Total

Sovereign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 90 — 90Financial institution . . . . . . . . . . . . . . . . . . . . . . . — — — —Manufacturer . . . . . . . . . . . . . . . . . . . . . . . . . . . — 3 — 3 Agriculture/forestry/fisheries . . . . . . . . . . . . . . . . — — — —Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — —Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — utilities (electric power/gas/heat supply/ water service) . . . . . . . . . . . . . . . . . . . . . . . . . . — — — —information & telecommunication . . . . . . . . . . . . — 2 — 2 transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 57 — 57 wholesale/retail . . . . . . . . . . . . . . . . . . . . . . . . . . — 6 — 6 Other financial business (moneylending, leasing) . . . — 17 — 17 Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 95 — 95 various services (excluding leasing) . . . . . . . . . . . — 26 — 26 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 942 295 — 1,237

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asel II C

apital A

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Pillar III—

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iscipline

Disclosure Based on Basel II Capital Accord Pillar III—Market Discipline

Mar. 2010

Allowance for loans to Industry sector General allowance Specific allowance restructuring countries Total

Sovereign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 89 — 89 Financial institution . . . . . . . . . . . . . . . . . . . . . . . — — — — Manufacturer . . . . . . . . . . . . . . . . . . . . . . . . . . . — 10 — 10 Agriculture/forestry/fisheries . . . . . . . . . . . . . . . . — — — — Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — utilities (electric power/gas/heat supply/ water service) . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — information & telecommunication . . . . . . . . . . . . — 13 — 13 transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 66 — 66 wholesale/retail . . . . . . . . . . . . . . . . . . . . . . . . . . — 7 — 7 Other financial business (moneylending, leasing) . . . — 255 — 255 Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 43 — 43 various services (excluding leasing) . . . . . . . . . . . — 43 — 43 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0 — 0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 663 526 — 1,189

Breakdown of Allowance by Industry Sector (Consolidated) (100 Million yen)

Sep. 2010

Allowance for loans to Industry sector General allowance Specific allowance restructuring countries Total

Sovereign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 94 — 94 Financial institution . . . . . . . . . . . . . . . . . . . . . . . — — — — Manufacturer . . . . . . . . . . . . . . . . . . . . . . . . . . . — 15 — 15 Agriculture/forestry/fisheries . . . . . . . . . . . . . . . . — — — — Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — utilities (electric power/gas/heat supply/ water service) . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — information & telecommunication . . . . . . . . . . . . — 33 — 33 transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 94 — 94 wholesale/retail . . . . . . . . . . . . . . . . . . . . . . . . . . — 7 — 7 Other financial business (moneylending, leasing) . . . — 71 — 71 Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 3 — 3 various services (excluding leasing) . . . . . . . . . . . — 50 — 50 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0 — 0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 680 368 — 1,048

Allowance (difference) (Mar. 2010–Sep. 2009)

Allowance for loans to Industry sector General allowance Specific allowance restructuring countries Total

Sovereign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (1) — (1)Financial institution . . . . . . . . . . . . . . . . . . . . . . . — — — —Manufacturer . . . . . . . . . . . . . . . . . . . . . . . . . . . — (3) — (3)Agriculture/forestry/fisheries . . . . . . . . . . . . . . . . — — — —Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — —Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — —utilities (electric power/gas/heat supply/ water service) . . . . . . . . . . . . . . . . . . . . . . . . . . — — — —information & telecommunication . . . . . . . . . . . . — (2) — (2)transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 9 — 9 wholesale/retail . . . . . . . . . . . . . . . . . . . . . . . . . . — 1 — 1 Other financial business (moneylending, leasing) . . . — 238 — 238Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (52) — (52) various services (excluding leasing) . . . . . . . . . . . — 18 — 18 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0 — 0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (283) 209 — (74)

101

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on B

asel II C

apital A

ccord

Pillar III—

Market D

iscipline

Allowance (difference) (Sep. 2010–Mar. 2010)

Allowance for loans to Industry sector General allowance Specific allowance restructuring countries Total

Sovereign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 5 — 5 Financial institution . . . . . . . . . . . . . . . . . . . . . . . — — — — Manufacturer . . . . . . . . . . . . . . . . . . . . . . . . . . . — 5 — 5Agriculture/forestry/fisheries . . . . . . . . . . . . . . . . — — — — Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — —utilities (electric power/gas/heat supply/ water service) . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — information & telecommunication . . . . . . . . . . . . — 20 — 20transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 27 — 27 wholesale/retail . . . . . . . . . . . . . . . . . . . . . . . . . . — 0 — 0Other financial business (moneylending, leasing) . . . — (184) — (184) Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (39) — (39)various services (excluding leasing) . . . . . . . . . . . — 7 — 7Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0 — 0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 (159) — (142)

Allowance (difference) (Mar. 2010–Sep. 2009)

Allowance for loans to Industry sector General allowance Specific allowance restructuring countries Total

Sovereign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (1) — (1) Financial institution . . . . . . . . . . . . . . . . . . . . . . . — — — — Manufacturer . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0 — 0 Agriculture/forestry/fisheries . . . . . . . . . . . . . . . . — — — — Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — utilities (electric power/gas/heat supply/ water service) . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — information & telecommunication . . . . . . . . . . . . — 7 — 7 transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 9 — 9 wholesale/retail . . . . . . . . . . . . . . . . . . . . . . . . . . — 1 — 1 Other financial business (moneylending, leasing) . . . — 238 — 238 Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (52) — (52) various services (excluding leasing) . . . . . . . . . . . — 18 — 18Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0 — 0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (199) 220 — 21

Sep. 2009

Allowance for loans to Industry sector General allowance Specific allowance restructuring countries Total

Sovereign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 90 — 90 Financial institution . . . . . . . . . . . . . . . . . . . . . . . — — — —Manufacturer . . . . . . . . . . . . . . . . . . . . . . . . . . . — 10 — 10 Agriculture/forestry/fisheries . . . . . . . . . . . . . . . . — — — —Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — —Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — utilities (electric power/gas/heat supply/ water service) . . . . . . . . . . . . . . . . . . . . . . . . . . — — — —information & telecommunication . . . . . . . . . . . . — 6 — 6 transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 57 — 57 wholesale/retail . . . . . . . . . . . . . . . . . . . . . . . . . . — 6 — 6 Other financial business (moneylending, leasing) . . . — 17 — 17 Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 95 — 95 various services (excluding leasing) . . . . . . . . . . . — 26 — 26 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 862 306 — 1,168

102

Financial and

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rate Data

Disclo

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on B

asel II C

apital A

ccord

Pillar III—

Market D

iscipline

Disclosure Based on Basel II Capital Accord Pillar III—Market Discipline

(4) Breakdown of Write-Offs by Industry Sector (Non-Consolidated) (100 Million yen)

Industry sector Sep. 2009 Sep. 2010

Sovereign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Financial institution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 —Manufacturer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 3Agriculture/forestry/fisheries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 —utilities (electric power/gas/heat supply/water service) . . . . . . . . . . . . . . . . . . . — — information & telecommunication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 3transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 0wholesale/retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 2 Other financial business (moneylending, lease) . . . . . . . . . . . . . . . . . . . . . . . . — —Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2various services (excluding leasing) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 0Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 11

Note: the table shows the breakdown of the write-off of loans in the Statement of Operations .

Breakdown of Write-Offs by Industry Sector (Consolidated) (100 Million yen)

Industry sector Sep. 2009 Sep. 2010

Sovereign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Financial institution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 —Manufacturer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 3Agriculture/forestry/fisheries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 —utilities (electric power/gas/heat supply/water service) . . . . . . . . . . . . . . . . . . . — — information & telecommunication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 2transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 0wholesale/retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 2 Other financial business (moneylending, lease) . . . . . . . . . . . . . . . . . . . . . . . . — —Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2various services (excluding leasing) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 —Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 9Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 19

Notes: 1 . the table shows the breakdown of the write-off of loans in the Statement of Operations . 2 . the ‘write-offs’ include write-offs made by AOzORA loan Services Co ., ltd ., which are shown on the ‘Others’ line .

(5) Outstanding Exposure after Recognizing Credit Risk Mitigations by Risk Weight (Non-Consolidated) (100 Million yen)

Sep. 2009 Sep. 2010

Amount of exposure Amount of exposure

Application of Amount of Application of Amount of Risk weight external rating capital deduction external rating capital deduction

0% . . . . . . . . . . . . . . . . . . . . . . . . 17,410 1,436 — 14,765 2,019 — > 0% <= 10% . . . . . . . . . . . . . . . . . 802 62 — 872 — — > 10% <= 20% . . . . . . . . . . . . . . . . 7,700 6,735 — 7,490 6,840 —> 20% <= 50% . . . . . . . . . . . . . . . . 5,344 4,899 — 4,609 3,959 — > 50% <= 75% . . . . . . . . . . . . . . . . 585 479 — 264 203 — > 75% <= 100% . . . . . . . . . . . . . . . 23,327 3,801 — 21,823 3,246 — > 100% <= 150% . . . . . . . . . . . . . . 5,004 413 — 3,760 494 — > 150% . . . . . . . . . . . . . . . . . . . . 207 77 — 231 15 — Capital deduction . . . . . . . . . . . . . 600 82 461 425 93 356 Total . . . . . . . . . . . . . . . . . . . . . . . 60,979 17,982 461 54,239 16,868 356

Notes: 1 . in the ‘Application of external rating’ section, the exposures to which an external rating is applied in the calculation of risk weight are included . 2 . Capital deduction above includes the amount deducted from capital in accordance with Provision 43 .1 .2 and 43 .1 .5 of the Notification .

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Outstanding Exposure after Recognizing Credit Risk Mitigations by Risk Weight (Consolidated) (100 Million yen)

Sep. 2009 Sep. 2010

Amount of exposure Amount of exposure

Application of Amount of Application of Amount of Risk weight external rating capital deduction external rating capital deduction

0% . . . . . . . . . . . . . . . . . . . . . . . . 17,421 1,436 — 14,777 2,019 —> 0% <= 10% . . . . . . . . . . . . . . . . . 802 62 — 869 — — > 10% <= 20% . . . . . . . . . . . . . . . . 7,696 6,733 — 7,426 6,775 — > 20% <= 50% . . . . . . . . . . . . . . . . 5,388 4,911 — 4,723 3,959 — > 50% <= 75% . . . . . . . . . . . . . . . . 496 479 — 259 203 — > 75% <= 100% . . . . . . . . . . . . . . . 24,979 4,435 — 22,786 3,794 — > 100% <= 150% . . . . . . . . . . . . . . 3,112 1,202 — 2,509 1,016 — > 150% . . . . . . . . . . . . . . . . . . . . 199 77 — 197 15 — Capital deduction . . . . . . . . . . . . . 600 82 461 425 93 356

Total . . . . . . . . . . . . . . . . . . . . . . 60,694 19,415 461 53,971 17,874 356

Notes: 1 . in the ‘Application of external rating’ section, the exposures to which an external rating is applied in the calculation of risk weight are included . 2 . Capital Deduction above includes the amount deducted from capital in accordance with Provision 31 .1 .3 and 31 .1 .6 of the Notification .

Breakdown of Exposure for which Credit Risk Mitigations Are Applied (Non-Consolidated) (100 Million yen)

Credit risk mitigant Sep. 2009 Sep. 2010

Eligible financial collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218 213 Cash and deposits at Aozora . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 102 Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1 Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144 110 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —Guarantees and credit derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,235 1,339 Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 764 740 Credit derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,471 599

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,453 1,552

Notes: 1 . the exposure above does not include the amount for which a credit risk mitigant is recognized through netting between loans and deposits at the Bank under the netting agreement (Provision 117 of the Notification) .

2 . Regarding the issuers of equities and debt securities included in Eligible Financial Assets, we have confirmed that the risk of concentration in individual companies or industries is modest .

Breakdown of Exposure for which Credit Risk Mitigations Are Applied (Consolidated) (100 Million yen)

Credit risk mitigant Sep. 2009 Sep. 2010

Eligible financial collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218 213 Cash and deposits at Aozora . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 102 Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1 Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144 110 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —Guarantees and credit derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,235 1,339 Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 764 740 Credit derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,471 599

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,453 1,552

Notes: 1 . the exposure above does not include the amount for which a credit risk mitigant is recognized through netting between loans and deposits at the Bank under the netting agreement (Provision 117 of the Notification) .

2 . Regarding the issuers of equities and debt securities included in Eligible Financial Assets, we have confirmed that the risk of concentration in individual companies or industries is modest .

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Breakdown of Eligible Financial Collateral Associated with Derivatives by Type (Non-Consolidated, Consolidated)

No applicable transactions existed as of end-September 2010 and end-September 2009 .

6. Items pertaining to counterparty risk on derivative product transactions

Breakdown of Derivative Products (Non-Consolidated) (100 Million yen)

Sep. 2009 Sep. 2010

Credit- Credit- Credit- equivalent Credit- Credit- equivalent Credit- equivalent amount equivalent equivalent amount equivalent amount reduction amount amount reduction amount (before credit effect through (after credit (before credit effect through (after credit Gross risk mitigating eligible risk mitigating Gross risk mitigating eligible risk mitigating replacement Gross effect is financial effect is replacement Gross effect is financial effect is cost add-on recognized) collateral recognized) cost add-on recognized) collateral recognized)

Type of transaction (A) (B) (C) = (A) +(B) (D) (E) = (C) + (D) (A) (B) (C) = (A) +(B) (D) (E) = (C) + (D)

Forex and gold-related . . . . . . . . . . . . . . . . 338 393 731 — 731 276 269 545 — 545 interest rate-related . . . . . . . . . . . . . . . . . . . 1,819 1,637 3,456 — 3,456 3,277 1,602 4,879 — 4,879 Equity-related . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — — —Precious metal-related (excluding gold-related) . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — — —Other commodity-related . . . . . . . . . . . . . . 0 0 1 — 1 — — — — — Credit derivatives (counterparty risk) . . . . . . 696 513 1,209 — 1,209 304 372 676 — 676 Credit-equivalent amount reduction effect through close-out netting agreement . . . . (1,964) (1,129) (3,093) — (3,093) (2,765) (995) (3,760) — (3,760)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 890 1,414 2,304 — 2,304 1,091 1,249 2,340 — 2,340

Note: the credit-equivalent amount is calculated by applying the current-exposure method .

Breakdown of Derivative Products (Consolidated) (100 Million yen)

Sep. 2009 Sep. 2010

Credit- Credit- Credit- equivalent Credit- Credit- equivalent Credit- equivalent amount equivalent equivalent amount equivalent amount reduction amount amount reduction amount (before credit effect through (after credit (before credit effect through (after credit Gross risk mitigating eligible risk mitigating Gross risk mitigating eligible risk mitigating replacement Gross effect is financial effect is replacement Gross effect is financial effect is cost add-on recognized) collateral recognized) cost add-on recognized) collateral recognized)

Type of transaction (A) (B) (C) = (A) +(B) (D) (E) = (C) + (D) (A) (B) (C) = (A) +(B) (D) (E) = (C) + (D)

Forex and gold-related . . . . . . . . . . . . . . . . 338 393 731 — 731 276 269 545 — 545 interest rate-related . . . . . . . . . . . . . . . . . . . 1,819 1,637 3,456 — 3,456 3,277 1,602 4,879 — 4,879 Equity-related . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — — —Precious metal-related (excluding gold-related) . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — — —Other commodity-related . . . . . . . . . . . . . . 0 0 1 — 1 — — — — — Credit derivatives (counterparty risk) . . . . . . 696 513 1,209 — 1,209 304 372 676 — 676 Credit-equivalent amount reduction effect through close-out netting agreement . . . . (1,964) (1,129) (3,093) — (3,093) (2,765) (995) (3,760) — (3,760)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 890 1,414 2,304 — 2,304 1,091 1,249 2,340 — 2,340

Note: the credit-equivalent amount is calculated by applying the current-exposure method .

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7. Items pertaining to securitization transactions

Breakdown of Credit Derivative Transactions (Consolidated) (100 Million yen)

Sep. 2009 Sep. 2010

Purchase or supply Purchase or supply Type of transaction of guarantee Notional principal of guarantee Notional principal

transactions subject to the calculation of credit equivalent amount . . . . . . . . . . . 12,558 9,279 Credit derivatives (credit reference asset of single organization) . . . . . . . . . . . Purchase 5,484 Purchase 4,069 Supply 6,890 Supply 5,026 First-to-default type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Purchase 85 Purchase 85 Supply 100 Supply 100 Second-to-default type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Purchase — Purchase — Supply — Supply —transactions not subject to the calculation of credit-equivalent amount . . . . . . . Purchase 1,548 Purchase 638 Note: the amount used in order to recognize the effect of a credit risk mitigant is provided in the transactions not subject to the calculation of credit-

equivalent amount .

Securitization-Related TransactionsSecuritization Exposure Held by the Bank (Non-Consolidated) (100 Million yen)

Sep. 2009 Sep. 2010

Category of underlying asset Case of originator Case of investor Total Case of originator Case of investor Total

Project finance . . . . . . . . . . . . . . . — 500 500 — 375 375 Equities . . . . . . . . . . . . . . . . . . . . . — 698 698 — 518 518 loans to businesses . . . . . . . . . . . 22 559 581 — 315 315 Residential loan receivables . . . . . . — 80 80 — 56 56 Ships/aircraft . . . . . . . . . . . . . . . . — 153 153 — 112 112 Real estate . . . . . . . . . . . . . . . . . . 17 4,018 4,036 17 4,586 4,604 Non-performing loans . . . . . . . . . . — 501 501 — 299 299 lease receivables . . . . . . . . . . . . . — 86 86 — 38 38 Consumer loan receivables . . . . . . — 193 193 — 172 172 Others . . . . . . . . . . . . . . . . . . . . . — 120 120 3 35 38 Total . . . . . . . . . . . . . . . . . . . . . . . 39 6,908 6,947 20 6,506 6,526

Securitization Exposure Held by the Bank (Consolidated) (100 Million yen)

Sep. 2009 Sep. 2010

Category of underlying asset Case of originator Case of investor Total Case of originator Case of investor Total

Project finance . . . . . . . . . . . . . . . — 518 518 — 392 392 Equities . . . . . . . . . . . . . . . . . . . . . — 698 698 — 518 518 loans to businesses . . . . . . . . . . . 22 559 581 — 315 315 Residential loan receivables . . . . . . — 80 80 — 56 56 Ships/aircraft . . . . . . . . . . . . . . . . — 153 153 — 112 112 Real estate . . . . . . . . . . . . . . . . . . 17 4,018 4,036 17 4,586 4,604 Non-performing loans . . . . . . . . . . — 501 501 — 299 299 lease receivables . . . . . . . . . . . . . — 86 86 — 38 38 Consumer loan receivables . . . . . . — 193 193 — 172 172 Others . . . . . . . . . . . . . . . . . . . . . — 120 120 — 35 35 Total . . . . . . . . . . . . . . . . . . . . . . . 39 6,926 6,965 17 6,523 6,540

Breakdown of Credit Derivative Transactions (Non-Consolidated) (100 Million yen)

Sep. 2009 Sep. 2010

Purchase or supply Purchase or supply Type of transaction of guarantee Notional principal of guarantee Notional principal

transactions subject to the calculation of credit equivalent amount . . . . . . . . . . . 12,558 9,279 Credit derivatives (credit reference asset of single organization) . . . . . . . . . . . Purchase 5,484 Purchase 4,069 Supply 6,890 Supply 5,026 First-to-default type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Purchase 85 Purchase 85 Supply 100 Supply 100 Second-to-default type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Purchase — Purchase — Supply — Supply —transactions not subject to the calculation of credit-equivalent amount . . . . . . . Purchase 1,593 Purchase 638 Note: the amount used in order to recognize the effect of a credit risk mitigant is provided in the transactions not subject to the calculation of credit-

equivalent amount .

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Securitization-Related TransactionsOutstanding Securitization Exposure Held by the Bank by Risk Weight (in an Appropriate Number) and Capital Requirement Thereof (Non-Consolidated) (100 Million yen)

Sep. 2009 Sep. 2010

Case of originator Case of investor Total Case of originator Case of investor Total

Capital Capital Capital Capital Capital Capital Risk weight Outstanding requirement Outstanding requirement Outstanding requirement Outstanding requirement Outstanding requirement Outstanding requirement

0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 15 — 15 — — — — — — —> 0% <= 20% . . . . . . . . . . . . . . . . . . . . . . . . — — 726 6 726 6 3 0 431 3 433 3 > 20% <= 50% . . . . . . . . . . . . . . . . . . . . . . 17 0 540 11 557 11 — — 397 8 397 8 > 50% <= 100% . . . . . . . . . . . . . . . . . . . . . 4 0 4,565 183 4,569 183 — — 4,994 199 4,994 199 > 100% <= 350% . . . . . . . . . . . . . . . . . . . . — — 581 41 581 41 — — 368 26 368 26 > 350% . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — — — — —Capital deduction . . . . . . . . . . . . . . . . . . . . 18 — 481 — 500 — 17 — 317 — 334 —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 0 6,908 240 6,947 241 20 0 6,506 237 6,526 237

Outstanding Securitization Exposure Held by the Bank by Risk Weight (in an Appropriate Number) and Capital Requirement Thereof (Consolidated) (100 Million yen)

Sep. 2009 Sep. 2010

Case of originator Case of investor Total Case of originator Case of investor Total

Capital Capital Capital Capital Capital Capital Risk weight Outstanding requirement Outstanding requirement Outstanding requirement Outstanding requirement Outstanding requirement Outstanding requirement

0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 15 — 15 — — — — — — —> 0% <= 20% . . . . . . . . . . . . . . . . . . . . . . . . — — 726 6 726 6 — — 431 3 431 3 > 20% <= 50% . . . . . . . . . . . . . . . . . . . . . . . 17 0 540 11 557 11 — — 397 8 397 8 > 50% <= 100% . . . . . . . . . . . . . . . . . . . . . . 4 0 4,583 183 4,587 183 — — 5,010 200 5,010 200 > 100% <= 350% . . . . . . . . . . . . . . . . . . . . . — — 581 41 581 41 — — 368 26 368 26 > 350% . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — — — — —Capital deduction . . . . . . . . . . . . . . . . . . . . 18 — 481 — 500 — 17 — 317 — 334 —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 0 6,926 241 6,965 241 17 — 6,523 238 6,540 238

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Securitization-Related Transactions Originated by AozoraBreakdown of Major Underlying Assets by Type (Non-Consolidated) (100 Million yen)

Sep. 2009 Sep. 2010

Amount of underlying asset Amount of Amount of underlying asset Amount of exposure exposure Securitization overdue Securitization overdue exposure Asset for three exposure Asset for three held as an transfer Synthetic months Losses for held as an transfer Synthetic months Losses for Category of underlying asset originator Total securitization securitization or more the term originator Total securitization securitization or more the term

Project finance . . . . . . . . . . . . . . . . . . — — — — — — — — — — — —Equities . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — — — — —loans to businesses . . . . . . . . . . . . . . 22 642 598 45 — — — — — — — —Residential loan receivables . . . . . . . . . — — — — — — — — — — — —Ships/aircraft . . . . . . . . . . . . . . . . . . . — — — — — — — — — — — —Real estate . . . . . . . . . . . . . . . . . . . . . 17 180 180 — — — 17 180 180 — — —Non-performing loans . . . . . . . . . . . . . — — — — — — — — — — — —lease receivables . . . . . . . . . . . . . . . . — — — — — — — — — — — —Consumer loan receivables . . . . . . . . . — — — — — — — — — — — —Others . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — 3 3 3 — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . 39 822 778 45 — — 20 183 183 — — —

Breakdown of Major Underlying Assets by Type (Consolidated) (100 Million yen)

Sep. 2009 Sep. 2010

Amount of underlying asset Amount of Amount of underlying asset Amount of exposure exposure Securitization overdue Securitization overdue exposure Asset for three exposure Asset for three held as an transfer Synthetic months Losses for held as an transfer Synthetic months Losses for Category of underlying asset originator Total securitization securitization or more the term originator Total securitization securitization or more the term

Project finance . . . . . . . . . . . . . . . . . . — — — — — — — — — — — —Equities . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — — — — —loans to businesses . . . . . . . . . . . . . . 22 45 — 45 — — — — — — — —Residential loan receivables . . . . . . . . . — — — — — — — — — — — —Ships/aircraft . . . . . . . . . . . . . . . . . . . — — — — — — — — — — — —Real estate . . . . . . . . . . . . . . . . . . . . . 17 180 180 — — — 17 180 180 — — —Non-performing loans . . . . . . . . . . . . . — — — — — — — — — — — —lease receivables . . . . . . . . . . . . . . . . — — — — — — — — — — — —Consumer loan receivables . . . . . . . . . — — — — — — — — — — — —Others . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — — — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . 39 225 180 45 — — 17 180 180 — — —

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Securitization-Related TransactionsSecuritization Exposure Deducted from Equity Capital in Accordance with Provision 247 of the Notification and Breakdown of Major Underlying Assets by Type (Non-Consolidated) (100 Million yen)

Sep. 2009 Sep. 2010

Case of originator Case of investor Total Case of originator Case of investor Total

Amount of Amount of Amount of Amount of Amount of Amount of Amount of capital Amount of capital Amount of capital Amount of capital Amount of capital Amount of capital Category of underlying asset exposure deduction exposure deduction exposure deduction exposure deduction exposure deduction exposure deduction

Project finance . . . . . . . . . . . . . . . . . . . . . . — — 4 4 4 4 — — 3 2 3 2 Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — — — — —loans to businesses . . . . . . . . . . . . . . . . . . 18 18 3 3 22 22 — — 19 19 19 19 Residential loan receivables . . . . . . . . . . . . . — — — — — — — — — — — —Ships/aircraft . . . . . . . . . . . . . . . . . . . . . . . — — 23 23 23 23 — — 18 18 18 18 Real estate . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 445 323 445 323 17 17 270 217 288 234 Non-performing loans . . . . . . . . . . . . . . . . . — — — — — — — — — — — —lease receivables . . . . . . . . . . . . . . . . . . . . — — 7 7 7 7 — — 7 7 7 7 Consumer loan receivables . . . . . . . . . . . . . — — — — — — — — — — — —Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 0 0 0 0 — — 0 0 0 0 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 18 481 359 500 378 17 17 317 262 334 279

Note: the figures above include the amount of capital deduction by applying the Supplementary Provision 15 of the Notification, ‘transitional Arrangements Regarding Securitization Exposure .’

Securitization-Related TransactionsSecuritization Exposure Deducted from Equity Capital in Accordance with Provision 247 of the Notification and Breakdown of Major Underlying Assets by Type (Consolidated) (100 Million yen)

Sep. 2009 Sep. 2010

Case of originator Case of investor Total Case of originator Case of investor Total

Amount of Amount of Amount of Amount of Amount of Amount of Amount of capital Amount of capital Amount of capital Amount of capital Amount of capital Amount of capital Category of underlying asset exposure deduction exposure deduction exposure deduction exposure deduction exposure deduction exposure deduction

Project finance . . . . . . . . . . . . . . . . . . . . . . — — 4 4 4 4 — — 3 2 3 2 Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — — — — —loans to businesses . . . . . . . . . . . . . . . . . . 18 18 3 3 22 22 — — 19 19 19 19 Residential loan receivables . . . . . . . . . . . . . — — — — — — — — — — — —Ships/aircraft . . . . . . . . . . . . . . . . . . . . . . . — — 23 23 23 23 — — 18 18 18 18 Real estate . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 445 323 445 323 17 17 270 217 288 234 Non-performing loans . . . . . . . . . . . . . . . . . — — — — — — — — — — — —lease receivables . . . . . . . . . . . . . . . . . . . . — — 7 7 7 7 — — 7 7 7 7 Consumer loan receivables . . . . . . . . . . . . . — — — — — — — — — — — —Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 0 0 0 0 — — 0 0 0 0 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 18 481 359 500 378 17 17 317 262 334 279 Note: the figures above include the amount of capital deduction by applying the Supplementary Provision 15 of the Notification, ‘transitional Arrangements

Regarding Securitization Exposure .’

Securitization-Related Transactions Originated by AozoraOutline of Exposures Securitized for the Current Term (Including the Amount of Exposure Securitized for the Current Term and Breakdown of Major Underlying Assets by Type) (Non-Consolidated) (100 Million yen)

Sep. 2009 Sep. 2010

Amount Amount Profit & loss on sale Amount Amount Profit & loss on sale securitized for equivalent to recognized during securitized for equivalent to recognized during Category of underlying asset the current term equity capital the current term the current term equity capital the current term

Project finance . . . . . . . . . . . . . . . . . . . . . . — — — — — —Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — —loans to businesses . . . . . . . . . . . . . . . . . . 598 — — — — —Residential loan receivables . . . . . . . . . . . . . — — — — — —Ships/aircraft . . . . . . . . . . . . . . . . . . . . . . . — — — — — —Real estate . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — —Non-performing loans . . . . . . . . . . . . . . . . . — — — — — —lease receivables . . . . . . . . . . . . . . . . . . . . — — — — — —Consumer loan receivables . . . . . . . . . . . . . — — — — — —Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — —Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 598 — — — — —

Note: the amount equivalent to the increased equity capital in tandem with securitization originated by Aozora Bank is provided as the amount equivalent to equity capital . the applicable transactions do not exist in the current term .

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Securitization-Related Transactions Originated by AozoraOutline of Exposures Securitized for the Current Term (Including the Amount of Exposure Securitized for the Current Term and Breakdown of Major Underlying Assets by Type) (Consolidated) (100 Million yen)

Sep. 2009 Sep. 2010

Amount Amount Profit & loss on sale Amount Amount Profit & loss on sale securitized for equivalent to recognized during securitized for equivalent to recognized during Category of underlying asset the current term equity capital the current term the current term equity capital the current term

Project finance . . . . . . . . . . . . . . . . . . . . . . — — — — — —Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — —loans to businesses . . . . . . . . . . . . . . . . . . — — — — — —Residential loan receivables . . . . . . . . . . . . . — — — — — —Ships/aircraft . . . . . . . . . . . . . . . . . . . . . . . — — — — — —Real estate . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — —Non-performing loans . . . . . . . . . . . . . . . . . — — — — — —lease receivables . . . . . . . . . . . . . . . . . . . . — — — — — —Consumer loan receivables . . . . . . . . . . . . . — — — — — —Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — —Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — —Note: the amount equivalent to the increased equity capital in tandem with securitization originated by Aozora Bank is provided as the amount equivalent

to equity capital . the applicable transactions do not exist in the current term .

Securitization Exposures Subject to Early Amortization Provisions Retainedin line with the Provision 252 of the Notification, as of end-September 2009 and 2010, there were no securitization exposures subject to early amortization treatment that are retained by external investors to calculate credit risk-weighted assets .

8. Items pertaining to market risk(1) The Value at Risk (VaR) number at term-end as well as the highest, lowest and average VaR numbers during

the disclosure period The Value at Risk (VaR ) number at term-end

The highest, lowest and average VaR numbers during the disclosure period

(100 Million yen)

As of Sep. 2009 As of Sep. 2010

Interest Funds and Interest Funds and rate Equity Forex others Total rate Equity Forex others Total

trading . . . . . 2 0 1 7 9 1 0 0 1 3Banking . . . . 21 1 0 11 32 18 2 0 17 34Total . . . . . . 22 1 1 18 40 19 2 0 18 37

Notes: 1 . ‘Funds and others’ includes hedge funds, REits and credit derivatives . 2 . the above figures are based on a 1-day holding period and a 99% confidence level . 3 . the figures for total vaR do not represent the sum of individual components, due to correlations .

(100 Million yen)

Sep. 2009 Sep. 2010

As of Sep. As of Sep. Average Highest Lowest 2009 Average Highest Lowest 2010

trading . . . . . . . . . . . . . . . . . . . . . . 11 22 7 9 4 6 3 3Banking . . . . . . . . . . . . . . . . . . . . . 33 36 31 32 33 37 29 34

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(2) Back-testing results and explanations in the event actual losses strayed significantly downward from VaR numbersthe following graph represents the results of the back testing for trading businesses with internal models over the 245 business days from October 1, 2009 to September 30, 2010 . the actual daily losses exceeded daily vaR on two business days . this result supports the reliability of the Bank’s vaR .

(1) Balance sheet amount (Millions of yen)

Sep. 2009 Sep. 2010

Non-consolidated Consolidated Non-consolidated Consolidated

Balance sheet amount . . . . . . . . . . . . . . . . . . . . 88,122 63,937 67,787 51,033 listed stock exposures . . . . . . . . . . . . . . . . . . 2,165 2,165 15,890 15,890 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85,957 61,772 51,897 35,143

9. Items pertaining to equity exposures in the banking book

(2) Gains and losses on sales, and write-offs of equity exposure (Millions of yen)

Sep. 2009 Sep. 2010

Non-consolidated Consolidated Non-consolidated Consolidated

Gains on sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 44 0 0losses on sales . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 102 (1) (1)write-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (13) (13)

(4) Unrealized gains/losses not recognized on the balance sheet or the statement of operations (For Sep . 2009 and Sep . 2010)

Consolidated: Not applicableNon-consolidated: Not applicable

10. Amount of exposures to which credit risk asset calculation is appliedthis item is described in Quantitative Disclosure 3 . (1) above .

11. Losses on interest rate shocks based on internal measures for interest rate risk related to the banking book, and changes in economic prices

(3) Unrealized gains/losses recognized on the balance sheet but not recognized on the statement of operations (Millions of yen)

Sep. 2009 Sep. 2010

Non-consolidated Consolidated Non-consolidated Consolidated

unrealized gains (losses) . . . . . . . . . . . . . . . . . . . . . (386) (386) (228) (228)

(100 Million yen, %)

Sep. 2009 Sep. 2010

P/l impact of interest rate shock . . . . . . . . . 317 333 Outlier ratio (ratio to tier i and tier ii) . . . . . . 5 .7 5 .9

Note: interest rate shock is defined as the 99th percentile of the interest rate movement distribution based on 1-year holding period observed during the past 5 years .

-10

- 8

- 6

- 4

- 2

0

2

4

6

8

10

0 1 2 3 4 5 6 7 8 9 10(VaR: JPY 100 Million)

(PL: JPY 100 Million)

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Published: January 2011 Corporate Communication Division AOZORA BANK, Ltd.

3-1, Kudan-minami 1-chome, Chiyoda-ku, Tokyo 102-8660, JapanTel: +81-3-3263-1111http://www.aozorabank.co.jp/english/

Printed in Japan

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This interim report is printed with soy ink.

Interim Report 2010Six-Month Period Ended September 30, 2010